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 | $ | 130,000 | $ | 156,500 |
Accounts receivable | 102,000 | 110,000 | ||
Inventory | 137,000 | 125,000 | ||
Total current assets | 369,000 | 391,500 | ||
Property, plant, and equipment | 360,000 | 350,000 | ||
Less accumulated depreciation | 120,000 | 87,500 | ||
Net property, plant, and equipment | 240,000 | 262,500 | ||
Total assets | $ | 609,000 | $ | 654,000 |
Accounts payable | $ | 80,000 | $ | 142,000 |
Income taxes payable | 62,000 | 86,000 | ||
Bonds payable | 150,000 | 125,000 | ||
Common stock | 175,000 | 150,000 | ||
Retained earnings | 142,000 | 151,000 | ||
Total liabilities and stockholders equity | $ | 609,000 | $ | 654,000 |
During the year, Ravenna paid a $15,000 cash dividend and it sold a piece of equipment for $7,500 that had originally cost $18,000 and had accumulated depreciation of $12,000. The company did not retire any bonds or repurchase any of its own common stock during the year. 2.What net income would the company include on its statement of cash flows? 3.How much depreciation would the company add to net income on its statement of cash flows? |
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