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 $13,200 cash dividend and it sold a piece of equipment for $6,600 that had originally cost $15,600 and had accumulated depreciation of $10,400. The company did not retire any bonds or repurchase any of its own common stock during the year.

What is the amount of net cash provided by (used in) operating activities in the company’s statement of cash flows?

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?

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

Notes:

1) Net profit = Ending retained profit + dividend - beginning retained profit

2) depreciation = ending accumulated depreciation + accumulated depreciation on the asset sold - beginning accumulated dpreciation

3) Asset purchased = ending gross asset + cost of the asset sold - beginning gross asset

Answers:

11) amount of net cash (used in operating activities in the company’s statement of cash flows = $34800

12) amount of gross cash outflows reported in the investing section of the company’s statement of cash flows = $25600 (purchase of assets)

13) company’s net cash used in investing activities = $19000

14) the amount of gross cash inflows reported in the financing section of the company’s statement of cash flows = $44000 ( issue of bonds + issue of shares)

15) company’s net cash provided by financing activities = $30800

Cash flow statement Net Income $       5,200.00 Adjustments to reconcile net income to opearting cash flows: Add: depreciation $   39,400.00 Decrease in accounts receivable $     7,000.00 $ 46,400.00 Less: Increase in inventory $   10,600.00 Decrease in accounts payable $   54,600.00 decrease in income tax payable $   19,800.00 Profit on sale of asset $     1,400.00 $ 86,400.00 $   -40,000.00 Net cash used in operating activites $   -34,800.00 Investing activites: sale of asset $     6,600.00 purchase of asset $ -25,600.00 Net cash flow from investing activites $   -19,000.00 Financing activites Issue of bond $   22,000.00 issue of common stock $   22,000.00 Payment of dividend $ -13,200.00 Net cash flow from financing activites $     30,800.00 Net cash used in the business during the year $   -23,000.00 Add: beginning cash balance $ 1,36,600.00 Ending cash balance $ 1,13,600.00

Related Questions

Navigate

• Browse (All)
• Browse R
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.