Question
Ravenna Company is a merchandiser that uses the indirect method to prepare the operating activities section of its statement of cash flows. Its balance sheet
Ravenna Company is a merchandiser that uses the indirect method to prepare the operating activities section of its statement of cash flows. Its balance sheet for this year is as follows: |
| Ending Balance | Beginning Balance | ||
Cash | $ | 52,800 | $ | 62,700 |
Accounts receivable |
| 45,100 |
| 48,400 |
Inventory |
| 60,500 |
| 55,000 |
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Total current assets |
| 158,400 |
| 166,100 |
| ||||
Property, plant, and equipment |
| 165,000 |
| 154,000 |
Less accumulated depreciation |
| 55,000 |
| 38,500 |
| ||||
Net property, plant, and equipment |
| 110,000 |
| 115,500 |
| ||||
Total assets | $ | 268,400 | $ | 281,600 |
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Accounts payable | $ | 35,200 | $ | 62,700 |
Income taxes payable |
| 27,500 |
| 30,900 |
Bonds payable |
| 66,000 |
| 55,000 |
Common stock |
| 77,000 |
| 66,000 |
Retained earnings |
| 62,700 |
| 67,000 |
| ||||
Total liabilities and stockholders equity | $ | 268,400 | $ | 281,600 |
| ||||
During the year, Ravenna paid a $6,600 cash dividend and it sold a piece of equipment for $3,300 that had originally cost $6,600 and had accumulated depreciation of $4,400. The company did not retire any bonds or repurchase any of its own common stock during the year. |
1. | What is the amount of the net increase or decrease in cash and cash equivalents that would be shown on the companys statement of cash flows? |
3. | How much depreciation would the company add to net income on its statement of cash flows? |
5-a. | What is the amount and direction (+ or ) of the accounts receivable adjustment to net income in the operating activities section of the statement of cash flows? |
5-b. | What does this adjustment represent? | ||||||
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7-a. | What is the combined amount and direction (+ or ) of the inventory and accounts payable adjustments to net income in the operating activities section of the statement of cash flows? | ||||||
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7-b. | What does this amount represent? | ||||||
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