Ravenna Company is a merchandiser that uses the indirect method to prepare the o
ID: 2473847 • 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 $7,800 cash dividend and it sold a piece of equipment for $3,900 that had originally cost $8,400 and had accumulated depreciation of $5,600. The company did not retire any bonds or repurchase any of its own common stock during the year.
What is the amount of the net increase or decrease in cash and cash equivalents that would be shown on the company’s statement of cash flows?
What is the combined amount and direction (+ or ) of the inventory and accounts payable adjustments to net income in the operating activities section of the statement of cash flows?
What does this amount represent?
If the company debited income tax expense and credited income taxes payable $940 during the year, what is the total amount of the debits recorded in the Income Taxes Payable account?
What is the amount and direction (+ or ) of the income taxes payable adjustment to net income in the operating activities section of the statement of cash flows?
What does this adjustment represent?
What is the amount of net cash provided by (used in) operating activities in the company’s statement of cash flows?
Would the operating activities section of the company’s statement of cash flows contain an adjustment for a gain or a loss? What would be the amount and direction ( + or ) of the adjustment?
What does the amount of these debits represent?
Taxes payable
What is the amount of gross cash outflows reported in the investing section of the company’s statement of cash flows?
What is the company’s net cash provided by (used in) investing activities?
What is the amount of gross cash inflows reported in the financing section of the company’s statement of cash flows?
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
Statement of Cash Flows Ans 1 Cash flows from operating activities Profit before taxation (74000-(79000-7800) 2,800.00 Adjustments for: Depreciation (64000-(45500-5600)) 24100 Gain on sale of equiment (3900-(8400-5600)) -1100 Working capital changes: Decrease in accounts receivables (57200-53200) 4,000.00 (Increase) in inventories (65000-71400) (6,400.00) (Decrease in Accounts Payable 74000-41600 (32,400.00) Cash generated from operations (9,000.00) Income taxes paid (39600-32400) -7200 Net cash from operating activities (16,200.00) Cash flows from investing activities Purchase of Equipment (192000-(182000-8400)) -18400 Proceeds from sale of Equipment 3,900.00 Net cash used in investing activities (14,500.00) Cash flows from financing activities Issue of Common Stock (91000-78000) 13,000.00 Borrowings from Bond Payable 13,000.00 Payment of Dividend (7,800.00) Net cash used in financing activities 18,200.00 Net increase in cash and cash equivalents (12,500.00) Cash and cash equivalents at beginning of period 76,900.00 Cash and cash equivalents at end of period 64,400.00 Ans 7a (Increase) in inventories (65000-71400) (6,400.00) (Decrease in Accounts Payable 74000-41600 (32,400.00) Combined Effect (38,800.00) Ans 7B Cash Paid to Suppliers>Purchases Ans 8a Income Tax Payable Debit Opening balance+credited in the year-Closing balance 39600+940-32400 8140 Ans 8b Cash paid for Income tax Ans 9a Income taxes paid (39600-32400) -7200 Ans 9b Tax poaid is greater thamn income tax expense for that year Ans 11 Net cash used inoperating activities (16,200.00) Ans 10 Gain on sale of equiment (3900-(8400-5600)) -1100 Ans 12 Purchase of Equipment (192000-(182000-8400)) -18400 Ans 13 Cash flows from investing activities Purchase of Equipment (192000-(182000-8400)) -18400 Proceeds from sale of Equipment 3,900.00 Net cash used in investing activities (14,500.00) Ans 14 Cash flows from financing activities Issue of Common Stock (91000-78000) 13,000.00 Borrowings from Bond Payable 13,000.00 Ans 15 Cash flows from financing activities Issue of Common Stock (91000-78000) 13,000.00 Borrowings from Bond Payable 13,000.00 Payment of Dividend (7,800.00) Net cash from financing activities 18,200.00
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