Chapter 10
The Statement of Cash Flow
512
Analysis
Suppose Robinson Company had a net increase in cash of $50,000. Explain why the company
may be in trouble despite having a large increase in cash during the year.
AP-10B (
3
)
Factsy Inc. is planning to make the best use out of its cash on hand by purchasing some
additional long-term investments. Factsy’s long-term investments are held at cost. In January
2016, Factsy bought additional investments. The company also sold part of its investments
in November 2016 due to a sudden growth in the value of its holdings. December 31 is its
year-end.
Below are the data of Factsy Company.
Accounts
2016
2015
Long-Term Investment
$120,000 $110,000
Purchase of Investment
$40,000
Gain on Sale of Investment
$5,000
Calculate the net change in cash resulting from the long-term investment.
