Ravenna Company is a merchandiser that uses the indirect method to prepare the o
ID: 2532756 • 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?
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
f) Calculation of the total amount of inventory purchases
Cost of Goods Sold = Beginning Inventory + Inventory PUrchases - Ending INventory
940,000 = 117,500 + Purchases – 128,800
Purchases = $951,300
The total amount of inventory purchases is $951,300 recorded on the debit side of the Inventory T-account and the credit side of the Accounts Payable T-account.
g) Total amount of Debits recorded in the Accounts Payable T-Account during the year
Total Amount of Debits recorded = Beginning Balance + Purchases - Ending Balance
= 133,500 + 951,300 – 75,200
= $1,009,600
h) 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 = $1,009,600 (-)
Cash paid to suppliers (Accounts Payable) = $1,009,600 (-)
i) total amount of the debits recorded in the Income Taxes Payable account = Beginning Tax Payable + Income tax recorded during the year - Ending Tax Payable
= 80,200 + 1780 - 58,300
= $23,680
Hope the above calculations, working and explanations are clear to you and help you in understanding the concept of question.... please rate my answer...in case any doubt, post a comment and I will try to resolve the doubt ASAP…thank you
Pls ask separate question for remaining parts
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.