Question

Pace Tech Market had the following transactions during 2020:

1.​Issued $50,000 of par value common stock for cash.

2.​Repaid a 6 year note payable in the amount of $22,000.

3.​Acquired land by issuing common stock of par value $100,000.

4.​Declared and paid a cash dividend of $2,000.

5.​Sold a long-term investment (cost $53,000) for cash of $82,000.

6.​Acquired an investment in PwC stock for cash of $55,000.

What is the net cash provided (used) by investing activities?

a.​$15,000

b.​$33,000

c.​$27,000

d.​$8,000

Answer 1

1. Issuance of common stock for cash - It is a Financing activity

2. Repayment of note payable - It is a Financing activity

3. Acquisition of land using common stock - This transaction does not involve any cash flow

4. Declaration and payment of cash dividend - It is a Financing activity

5. Sale of long term investment - It is an Investing activity. This will lead to a cash inflow of $82000

6. Investment in PwC stock - It is an Investing activity. This will lead to a cash outflow of $55000

Net cash provided / (used) by investing activities = 82000 - 55000 = $27000

Therefore, the correct answer is Option C i.e $27000