Ravenna Company is a merchandiser that uses the Indirect method to prepere the o

Question

Ravenna Company is a merchandiser that uses the Indirect method to prepere the opereting actvites section of its statement of cash flows. Its balence sheet for this year is as follows Cash Accounts recelvable Inventory Balance S 56,200 66,950 47,10050,600 63,20057,500 Total current assets 166,500 175,050 Property, plant, and equipment Less accumulated depreciation 171,000 161,000 57,00040,250 Net property, plant, and equipment 114,000 120,750 Total assets $280,500 $295,800 Accounts payable Income taxes payable Bonds payable Common stock Retained earnings s 36,800 65,500 28,700 33,800 69,000 57,500 80,500 69,000 65,500 70,000 Total liabilities and stockholders equity $280,500 $295.800 During the year, Ravenna paid e $6.900 cash dividend and it sold e plece of equipment for $3,450 that hed onginolly cost $7,200 and had accumulated depreciation of $4.800. The company dia not retre any bonds or repurchase any of its own common stock during the year sh dividend and It sold a plece of equipment for $3,450 that hed References

Explanation / Answer

8a) Income tax payable - opening balance 33800 Add : tax expense for the year 820 less :: closing balance 28700 Debits recorded 5920 8b) these debits represents cash paid for income tax 9a) The income tax payable adjustment is subtracted (-) in the net income in the operating activities section f the cash flows 9b) This adjustment represents Tax paid > income tax expense 10) Yes there would be an adjustment for a gain or a loss in the operating activity section of cash flows The amount of gain and loss is Original cost 7200 Less : accumulated depriciation 4800 WDV 2400 Sale price 3450 Net gain 1050 the net gain of 1050 would be deducted from the net income in the operating activity section in cash flows 11) retained earnings closing balance 65500 Add : dividends paid 6900 less :Retaine earning - opening balance 70000 Net profit for the year 2400 net cash flow from operating activity Net profit for the year 2400 refer working above Add Decrease in accounts receivable 3500 Depriciation 21550 25050 refer working below Less Increase in inventory 5700 net gain on sale of equipment 1050 refer answer 10 above Decrease in accounts payable 28700 35450 net cash flow from operating activity ( cash used) -8000 depriciation accumulated depriciation closing balance 57000 Add : depriciation of sold equipment 4800 Less : accumulated depriciation opening balance 40250 depriciation for the year 21550 12) Gross cash outflow - investing activity Purchase of Property plant and equipment closing balance - gross 171000 Add : equipment sold-original cost 7200 Less : beginning balance - gross 161000 Purchase of Property plant and equipment 17200 Hence Gross cash outflow - investing activity 17200 13) Net cash ( used ) in investing activity Gross cash outflow - investing activity 17200 Less : proceeds from sale of equipment 3450 Net cash ( used ) in investing activity 13750 14) Gross cash infflows - financing activity Issuance of bonds payable ( 69000-57500) 11500 Issuance of common stock ( 80500-69000) 11500 Gross cash infflows - financing activity 23000 15) Net cash flow - financing activity Gross cash infflows - financing activity 23000 Less : Dividends paid 6900 Net cash flow - financing activity 16100

Related Questions

Navigate

• Browse (All)
• Browse R
• Subjects

---

---

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