Ravenna Company is a merchandiser that uses the indirect method to prepare the o
ID: 2487757 • 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 $6,000 cash dividend and it sold a piece of equipment for $3,000 that had originally cost $6,000 and had accumulated depreciation of $4,000. The company did not retire any bonds or repurchase any of its own common stock during the year.
PLEASE ANSWER ALL PARTS
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?
4. If the company debited Accounts Receivable and credited Sales for $600,000 during the year, what is the total amount of credits recorded in Accounts Receivable during the year?
5. 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?
6A. If the company debited cost of goods sold and credited inventory for $400,000 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?
6B. What is the total amount of the debits recorded in the Accounts Payable T-account during the year?
7. 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?
8. If the company debited income tax expense and credited income taxes payable $700 during the year, what is the total amount of the debits recorded in the Income Taxes Payable account?
9. 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?
10. 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?
11. What is the amount of net cash provided by (used in) operating activities in the company’s statement of cash flows?
12. What is the amount of gross cash outflows reported in the investing section of the company’s statement of cash flows?
13. What is the company’s net cash provided by (used in) investing activities?
14. 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?
PLEASE ANSWER ALL PARTS
THANK YOU
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
2. Net income included by the company on its statement of cash flows is $2,000 (Closing retained earning plus dividend paid- opening retained earning)
3. Depreciation added to net income on its statement of cash flows is $19,000
4. If the company debited Accounts Receivable and credited Sales for $600,000 during the year, what is the total amount of credits recorded in Accounts Receivable during the year? In such case opening AR of $44,000 will be added to $600,000
5. 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? Accounts receivable decrease by $3,000 so will be added back to the statement of cash flow as money is collected.
Cash Flow statement is prepared as under:
Ravenna Company Statement of Cash Flows For the year ended December 31, 20XX Particulars Amount ($) Amount ($) Cash Flow from operating activities: Net Income 2,000 Adjustments to reconcile: Add: Depreciation 19,000 Less: gain on slae of equipment -1,000 Changes in current operating assets and liabilities Decrease in Accounts Receivable 3,000 Increase in merchandise inventory -5,000 Decrease in Accounts Payable -25,000 Decrease in Income tax payable -3,000 -30,000 Net Cash flows from Operating Activities -10,000 Cash flows from Investing Activities: Sale of equipment 3,000 Purchase of equipment -16,000 Net Cash flows used in investing activities -13,000 Cash flows from Financing Activities: Cash received from common stock 10,000 Dividends Paid -6,000 Bonds purchased 10,000 Net Cash flows used in financing activities 14,000 Net increase in Cash balance -9,000 Cash as of January 1,20XX 57,000 Cash as of December 31, 20XX 48,000Related Questions
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