Ravenna Company is a merchandiser that uses the indirect method to prepare the o
ID: 2532615 • 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 $14,100 cash dividend and it sold a piece of equipment for $7,050 that had originally cost $16,800 and had accumulated depreciation of $11,200. The company did not retire any bonds or repurchase any of its own common stock during the year.
f. If the company debited cost of goods sold and credited inventory for $940,000 during the year, what is the total amount of inventory purchases recorded on the debit side of the Inventory T-account and the credit side of the Accounts Payable T-account?
g. What is the total amount of the debits recorded in the Accounts Payable T-account during the year?
h. 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?
i. If the company debited income tax expense and credited income taxes payable $1,780 during the year, what is the total amount of the debits recorded in the Income Taxes Payable account?
j. 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?
k. 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?
l. What is the amount of net cash provided by (used in) operating activities in the company’s statement of cash flows?
m.What is the amount of gross cash outflows reported in the investing section of the company’s statement of cash flows?
n.What is the company’s net cash provided by (used in) investing activities?
o.What is the amount of gross cash inflows reported in the financing section of the company’s statement of cash flows?
p.What is the company’s net cash provided by (used in) financing activities?
Ending Balance Beginning Balance Cash $ 121,800 $ 146,550 Accounts receivable 95,900 103,400 Inventory 128,800 117,500 Total current assets 346,500 367,450 Property, plant, and equipment 339,000 329,000 Less accumulated depreciation 113,000 82,250 Net property, plant, and equipment 226,000 246,750 Total assets $ 572,500 $ 614,200 Accounts payable $ 75,200 $ 133,500 Income taxes payable 58,300 80,200 Bonds payable 141,000 117,500 Common stock 164,500 141,000 Retained earnings 133,500 142,000 Total liabilities and stockholders’ equity $ 572,500 $ 614,200Explanation / Answer
Op balance
146550
Add Equipement sold
7050
Less dividend paid
14100
net
139500
Opening inventory
117500
Add account receivable closing
95900
Less account receivable oening
103400
Add inventory added
940000
net
1050000
Op balance
146550
Add Equipement sold
7050
Less dividend paid
14100
net
139500
Opening inventory
117500
Add account receivable closing
95900
Less account receivable oening
103400
Add inventory added
940000
net
1050000
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