Answer:
Find below the complete question:
During 2017, Paxon Corporation’s long-term investments account (at cost) increased $15,000, which was the net result of purchasing stocks costing $80,000 and selling stocks costing $65,000 at a $6,000 loss. Also, its bonds payable account decreased $40,000, the net result of issuing $100,000 of bonds at $103,000 and retiring bonds with a face value (and book value) of $140,000 at a $9,000 gain.
What items and amounts appear in the (a) cash flows from investing activities and (b) cash flows from financing activities sections of its 2017 statement of cash flows?
Use negative signs with answers, when appropriate.
Cash flows from investing activities
Purchase of stock investments $Answer
Sale of stock investments $Answer
Cash flows from financing activities
Issuance of bonds $Answer
Retirement of bonds $Answer
Net cash used by investing activities is -$15,000
Net cash used by financing activities is -$28,000
Explanation:
Firstly,it is imperative to know that the gains or losses on these transactions do not have cash flow impact since gains and losses are statement of profit or loss items.
Cash flows from investing activities
Purchase of stock investments -$80,000
Sale of stock investments $65,000
Net provided/(used) by investing activities -$15,000
Cash flows from financing activities
Issuance of bonds $103,000
Retirement of bonds -$131,000
Net cash provided/(used) by financing activities -$28,000
Retirement of bonds with face value of $140,000 at a gain of $9,000 implies that it retired at $9,000 less than its face value,which is $131,000
