Ravenna Company is a merchandiser that uses the indirect method to prepare the o

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 for this year is as follows: Ending Balance Beginning Balance Cash $ 110,200 $ 132,350 Accounts receivable 87,800 94,600 Inventory 117,900 107,500 Total current assets 315,900 334,450 Property, plant, and equipment 312,000 301,000 Less accumulated depreciation 104,000 75,250 Net property, plant, and equipment 208,000 225,750 Total assets $ 523,900 $ 560,200 Accounts payable $ 68,800 $ 122,200 Income taxes payable 53,400 71,500 Bonds payable 129,000 107,500 Common stock 150,500 129,000 Retained earnings 122,200 130,000 Total liabilities and stockholders’ equity $ 523,900 $ 560,200 During the year, Ravenna paid a $12,900 cash dividend and it sold a piece of equipment for $6,450 that had originally cost $15,000 and had accumulated depreciation of $10,000. The company did not retire any bonds or repurchase any of its own common stock during the year.

Explanation / Answer

Amount Change AR 6800 94600-87800 Inventory -10400 107500-117900 Plant -11000 301000-312000 Depriciation 28750 104000-75250 AP -53400 68800-122200 Income Tax -18100 53400-71500 Bonds 21500 129000-107500 Equity 21500 150500-129000 Dividend not to be considered Sale of Equip not to be considered Net Profit change -7800 122200-130000 Total -22150

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