Ravenna Company is a merchandiser that uses the indirect method to prepare the o
ID: 2454442 • Letter: R
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:
During the year, Ravenna paid a $11,400 cash dividend and it sold a piece of equipment for $5,700 that had originally cost $13,200 and had accumulated depreciation of $8,800. The company did not retire any bonds or repurchase any of its own common stock during the year.
Required:
11. What is the amount of net cash provided by (used in) operating activities in the company’s statement of cash flows?
12. What is the amount of gross cash outflows reported in the investing section of the company’s statement of cash flows?
13. What is the company’s net cash provided by (used in) investing activities?
14. What is the amount of gross cash inflows reported in the financing section of the company’s statement of cash flows?
15. What is the company’s net cash provided by (used in) financing activities?
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:
Explanation / Answer
Answer:11 Net cash used in operating activities=-28600
Answer:12 The gross cash outflows of $23200 can be computed by applying the basic equation for assets to the Property, Plant, and Equipment account as follows:
Beginning balance + Debits – Credits = Ending balance
$266000 + Debits – $13200 = $276,000
Debits = $276,000 – $266000+ $13200
Debits = $23200
Answer:13 The net cash provided by (used in) investing activities is $(17500). This amount includes the $(23200) cash outflow related to the purchase of property, plant, and equipment (as computed above) and the $5700 cash inflow from the sale of equipment
Answer: 14 Gross cash inflow=$38000
The following table can be used to analyze the changes in noncash balance sheet accounts that impact investing and financing cash flows:
Because Ravenna did not retire any bonds or repurchase any of its own common stock during the year, the corresponding amounts in the table above represent the gross cash inflows that are included in financing section of the statement of cash flows.
Answer:15 The cash inflows of $38,000 from the issuance of bonds and common stock (as computed above) minus the cash dividend of $11400 equals net cash provided by (used in) financing activities of $26600.
Net income -7000 Dividend paid 11400 Dec in account receivable 6000 Inc in inventory -9200 Dep 34300 Dec in accounts payable -47200 Profit on sale of plant -1300 dec in income tax payable -15600 Net cash flow used in operating activities -28600Related Questions
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