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21 January, 15:05

Green Co. had the following equity transactions at December 31:Cash proceeds from sale of investment in Blue Co. (carrying value - $60,000) $75,000Dividends received on Grey Co. stock 10,500Common stock purchased from Brown Co. 38,000What amount should Green recognize as net cash from investing activities in its statement of cash flows at December 31 under U. S. GAAP? a. $37,000b. $47,500c. $75,000d. $85,500

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  1. 21 January, 17:48
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    b. $47,500

    Explanation:

    Investing Activities are those activities in the company invests some amount and any form of return in cash or cash equivalents is accounted under this category.

    Provided information,

    Cash proceeds from sale of investments in Blue Co. = $75,000

    This will be cash inflow from investing activities, the entire amount will be considered and not only the gain.

    Dividends received from Grey Co. $10,500

    This will be investing activity cash inflow as this is income from investments.

    Common stock purchased from Brown Co. $38,000

    This will be investing activity cash outflow as for this cash was given for making investment.

    Net effect of all the above transactions = $75,000 + $10,500 - $38,000 = $47,500

    Therefore correct option is

    b. $47,500
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Home » Business » Green Co. had the following equity transactions at December 31:Cash proceeds from sale of investment in Blue Co. (carrying value - $60,000) $75,000Dividends received on Grey Co. stock 10,500Common stock purchased from Brown Co.
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