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I have run into some confusion with a question. The correct answer from Wiley is ‘C’ and includes the subtraction of the $550,000 note/real-estate purchase to find the net cash used for investing activities. However, the question appears to show the $550,000 as investing and financing transactions that do not have a cash affect and should instead get a supplemental disclosure per ASC 230.
Is anyone able to provide any guidance about why the $550k was included in arriving at the answer of ‘C’?
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Kollar Corp.’s transactions for the year ended December 31, year 2, included the following:
* Purchased real estate for $550,000 cash which was borrowed from a bank.
* Sold available-for-sale investment securities for $500,000.
* Paid dividends of $600,000.
* Issued 500 shares of common stock for $250,000.
* Purchased machinery and equipment for $125,000 cash.
* Paid $450,000 toward a bank loan.
* Reduced accounts receivable by $100,000.
* Increased accounts payable by $200,000.
Kollar’s net cash used in investing activities for year 2 was
$675,000
$375,000
$175,000
$ 50,000
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