An analysis of the machinery accounts of Jezak Company for 2012 is as follows:

Machinery, net of

Accumulated Accumulated

Machinery Depreciation Depreciation

Balance at January 1, 2012 $1,650,000 $850,000 $800,000

Purchases of new machinery

in 2012 for cash 425,000 425,000

Depreciation in 2012 275,000 (275,000)

Balance at Dec. 31, 2012 $2,075,000 $1,125,000 $950,000

The information concerning Jezak's machinery accounts should be shown in Jezak's statement of cash flows (indirect method) for the year ended December 31, 2012, as a (n)

Select one:

a.

subtraction from net income of $425,000 and a $275,000 decrease in cash flows from financing activities.

b.

addition to net income of $275,000 and a $425,000 decrease in cash flows from investing activities.

c. $425,000 increase in cash flows from financing activities.

d. $150,000 decrease in cash flows from investing activities