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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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