Ravenna Company is a merchandiser that uses the indirect method to prepare the o
ID: 2468382 • 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 $7,500 cash dividend and it sold a piece of equipment for $3,750 that had originally cost $7,800 and had accumulated depreciation of $5,200. The company did not retire any bonds or repurchase any of its own common stock during the year.
1.
value:
10.00 points
Required information
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?
References
eBook & Resources
WorksheetLearning Objective: 14-01 Classify cash inflows and outflows as relating to operating, investing, or financing activities.
Difficulty: 2 MediumLearning Objective: 14-02 Prepare a statement of cash flows using the indirect method to determine the net cash provided by operating activities.
Check my work
2.
value:
10.00 points
Required information
What net income would the company include on its statement of cash flows?
rev: 12_09_2014_QC_CS-1017
References
eBook & Resources
WorksheetLearning Objective: 14-01 Classify cash inflows and outflows as relating to operating, investing, or financing activities.
Difficulty: 2 MediumLearning Objective: 14-02 Prepare a statement of cash flows using the indirect method to determine the net cash provided by operating activities.
Check my work
3.
value:
10.00 points
Required information
How much depreciation would the company add to net income on its statement of cash flows?
References
eBook & Resources
WorksheetLearning Objective: 14-01 Classify cash inflows and outflows as relating to operating, investing, or financing activities.
Difficulty: 2 MediumLearning Objective: 14-02 Prepare a statement of cash flows using the indirect method to determine the net cash provided by operating activities.
Check my work
4.
value:
10.00 points
Required information
If the company debited Accounts Receivable and credited Sales for $750,000 during the year, what is the total amount of credits recorded in Accounts Receivable during the year?
What does the amount of these credits represent?
References
eBook & Resources
WorksheetLearning Objective: 14-01 Classify cash inflows and outflows as relating to operating, investing, or financing activities.
Difficulty: 2 MediumLearning Objective: 14-02 Prepare a statement of cash flows using the indirect method to determine the net cash provided by operating activities.
Check my work
5.
value:
10.00 points
Required information
What is the amount and direction (+ or ) of the accounts receivable adjustment to net income in the operating activities section of the statement of cash flows?
References
eBook & Resources
WorksheetLearning Objective: 14-01 Classify cash inflows and outflows as relating to operating, investing, or financing activities.
Difficulty: 2 MediumLearning Objective: 14-02 Prepare a statement of cash flows using the indirect method to determine the net cash provided by operating activities.
Check my work
6.
value:
10.00 points
Required information
If the company debited cost of goods sold and credited inventory for $500,000 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?
What is the total amount of the debits recorded in the Accounts Payable T-account during the year?
What does the amount of these debits represent?
References
eBook & Resources
WorksheetLearning Objective: 14-01 Classify cash inflows and outflows as relating to operating, investing, or financing activities.
Difficulty: 2 MediumLearning Objective: 14-02 Prepare a statement of cash flows using the indirect method to determine the net cash provided by operating activities.
Check my work
7.
value:
10.00 points
Required information
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?
References
eBook & Resources
WorksheetLearning Objective: 14-01 Classify cash inflows and outflows as relating to operating, investing, or financing activities.
Difficulty: 2 MediumLearning Objective: 14-02 Prepare a statement of cash flows using the indirect method to determine the net cash provided by operating activities.
Check my work
8.
value:
10.00 points
Required information
If the company debited income tax expense and credited income taxes payable $910 during the year, what is the total amount of the debits recorded in the Income Taxes Payable account?
What does the amount of these debits represent?
References
eBook & Resources
WorksheetLearning Objective: 14-01 Classify cash inflows and outflows as relating to operating, investing, or financing activities.
Difficulty: 2 MediumLearning Objective: 14-02 Prepare a statement of cash flows using the indirect method to determine the net cash provided by operating activities.
Check my work
9.
value:
10.00 points
Required information
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?
References
eBook & Resources
WorksheetLearning Objective: 14-01 Classify cash inflows and outflows as relating to operating, investing, or financing activities.
Difficulty: 2 MediumLearning Objective: 14-02 Prepare a statement of cash flows using the indirect method to determine the net cash provided by operating activities.
Check my work
10.
value:
10.00 points
Required information
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 effect of the adjustment?
References
eBook & Resources
WorksheetLearning Objective: 14-01 Classify cash inflows and outflows as relating to operating, investing, or financing activities.
Difficulty: 2 MediumLearning Objective: 14-02 Prepare a statement of cash flows using the indirect method to determine the net cash provided by operating activities.
Check my work
11.
value:
10.00 points
Required information
What is the amount of net cash provided by (used in) operating activities in the company’s statement of cash flows?
References
eBook & Resources
WorksheetLearning Objective: 14-01 Classify cash inflows and outflows as relating to operating, investing, or financing activities.
Difficulty: 2 MediumLearning Objective: 14-02 Prepare a statement of cash flows using the indirect method to determine the net cash provided by operating activities.
Check my work
12.
value:
10.00 points
Required information
What is the amount of gross cash outflows reported in the investing section of the company’s statement of cash flows?
References
eBook & Resources
WorksheetLearning Objective: 14-01 Classify cash inflows and outflows as relating to operating, investing, or financing activities.
Difficulty: 2 MediumLearning Objective: 14-02 Prepare a statement of cash flows using the indirect method to determine the net cash provided by operating activities.
Check my work
13.
value:
10.00 points
Required information
What is the company’s net cash provided by (used in) investing activities?
References
eBook & Resources
WorksheetLearning Objective: 14-01 Classify cash inflows and outflows as relating to operating, investing, or financing activities.
Difficulty: 2 MediumLearning Objective: 14-02 Prepare a statement of cash flows using the indirect method to determine the net cash provided by operating activities.
Check my work
14.
value:
10.00 points
Required information
What is the amount of gross cash inflows reported in the financing section of the company’s statement of cash flows?
References
eBook & Resources
WorksheetLearning Objective: 14-01 Classify cash inflows and outflows as relating to operating, investing, or financing activities.
Difficulty: 2 MediumLearning Objective: 14-02 Prepare a statement of cash flows using the indirect method to determine the net cash provided by operating activities.
Check my work
15.
value:
10.00 points
Required information
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
Cash flow statement Net Income $ 2,700.00 Adjustments to reconcile net income to opearting cash flows: Add: depreciation $ 23,450.00 Decrease in accounts receivable $ 3,800.00 $ 27,250.00 Less: Increase in inventory $ 6,200.00 Decrease in accounts payable $ 31,200.00 decrease in income tax payable $ 5,500.00 Profit on sale of asset $ 1,150.00 $ 44,050.00 $ -16,800.00 Net cash used in operating activites $ -14,100.00 Investing activites: sale of asset $ 3,750.00 purchase of asset $ -18,800.00 Net cash flow from investing activites $ -15,050.00 Financing activites Issue of bond $ 12,500.00 issue of common stock $ 12,500.00 Payment of dividend $ -7,500.00 Net cash flow from financing activites $ 17,500.00 Net cash used in the business during the year $ -11,650.00 Add: beginning cash balance $ 72,650.00 Ending cash balance $ 61,000.00 1) amount of the net increase or decrease in cash and cash equivalents that would be shown on the company’s statement of cash flows = $72650-$61000 = $11650 2) net income would the company include on its statement of cash flows = Ending retained earnings + dividend paid - beginning retained earnings = $71200+7500-76000 = $2700 3) depreciation that the company would add to net income on its statement of cash flows = Ending accumulated depreciation + accumulated depreciation on asset sold - beginning accumulated depreciation = $62000+5200-43750= $23450 4a) collection from customer (credit to accounts receivable during the year) = beginning balance + sales on account during the year - ending balance = 55000+750000-51200 = $753800 4b) Cash collections from customers 5a) Decrease in accounts receivable = 55000-51200 = $3800. The direction is positive representing a cash inflow 5b) Cash collected from customers > credit sales (refer to 4a) 6a) purchase = COGS + ending inventory - beginning inventory = 500000+68700-62500 = $506200 6b) Payment to suppliers = beginning inventory + purchase - ending inventory = 62500+500000-68700= $493800 6c) Supplier payments 7a) Increase in inventory + decrease in accounts payable = 6200+31200= $37400. Direction is negative representing cash outflow 7b) Cash paid to suppliers > purchases 8a) debit to income tax payable account = beginning balance + income tax expense - ending balance = 36700+910-31200 = $6410 8b) Cash paid for income tax 9a) Amount = $6410, direction negative means cash outflow 9b) Tax paid > income tax expenses 10) $3750 - ($7800-$5200)=$1150. Gain on sale of asset. It will be subtracted from the net income to reconcile the same with the operating cash flows. Note: purchase of asset = (186000-(175000-7800)) = $18800 11) the amount of gross cash outflows reported in the investing section of the company’s statement of cash flows = $44050 12) company’s net cash used in investing activities = $14100 13) the amount of gross cash inflows reported in the financing section of the company’s statement of cash flows = $12500+$12500=$25000 14) (company’s net cash provided by (used in) financing activities = $17500
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.