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 & cash equivalents	$ 56,200	$ 66,950
Accounts receivable	47,100	50,600
Inventory	63,200	57,500
Total current assets	166,500	175,050
Property, plant, and equipment	171,000	161,000
Less accumulated depreciation	57,000	40,250
Net property, plant, and equipment	114,000	120,750
Total assets	$ 280,500	$ 295,800
Accounts payable	$ 36,800	$ 65,500
Income taxes payable	28,700	33,800
Bonds payable	69,000	57,500
Common stock	80,500	69,000
Retained earnings	65,500	70,000
Total liabilities and stockholders equity	$ 280,500	$ 295,800

During the year, Ravenna paid a $6,900 cash dividend and it sold a piece of equipment for $3,450 that had originally cost $7,200 and had accumulated depreciation of $4,800. The company did not retire any bonds or repurchase any of its own common stock during the year.

Foundational 13-1 (Algo)

Required:

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?

2. What net income would the company include on its statement of cash flows?

4-a. If the company debited Accounts Receivable and credited Sales for $690,000 during the year, what is the total amount of credits recorded in Accounts Receivable during the year?

4-b. What does the amount of these credits represent?