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:

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?

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

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

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