Ravenna Company is a merchandiser that uses the indirect method to prepare the operating activities section...

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Accounting

Ravenna Company is a merchandiser that uses the indirect methodto prepare the operating activities section of its statement ofcash flows. Its balance sheet for this year is as follows:
Ending Balance Beginning Balance
Cash and cash equivalents $ 113,600 $ 136,600
Accounts receivable 89,800 96,800
Inventory 120,600 110,000
Total current assets 324,000 343,400
Property, plant, and equipment 318,000 308,000
Less accumulated depreciation 106,000 77,000
Net property, plant, and equipment 212,000 231,000
Total assets $ 536,000 $ 574,400
Accounts payable $ 70,400 $ 125,000
Income taxes payable 54,600 74,400
Bonds payable 132,000 110,000
Common stock 154,000 132,000
Retained earnings 125,000 133,000
Total liabilities and stockholders’ equity $ 536,000 $574,400
During the year, Ravenna paid a $13,200 cash dividend and itsold a piece of equipment for $6,600 that had originally cost$15,600 and had accumulated depreciation of $10,400. The companydid not retire any bonds or repurchase any of its own common stockduring the year.
1. What is the amount of the net increase or decrease in cashand cash equivalents that would be shown on the company’s statementof cash flows?
2. What net income would the company include on its statement ofcash flows?
3.How much depreciation would the company add to net income onits statement of cash flows?
4-a. If the company debited Accounts Receivable and creditedSales for $1,320,000 during the year, what is the total amount ofcredits recorded in Accounts Receivable during the year?
4-b. What does the amount of these credits represent?
5-a. What is the amount and direction (+ or ?) of the accountsreceivable adjustment to net income in the operating activitiessection of the statement of cash flows?
5-b. What does this adjustment represent?
6-a. If the company debited cost of goods sold and creditedinventory for $880,000 during the year, what is the total amount ofinventory purchases recorded on the debit side of the InventoryT-account and the credit side of the Accounts PayableT-account?
6-b. What is the total amount of the debits recorded in theAccounts Payable T-account during the year?
6-c. What does the amount of these debits represent?
7-a. What is the combined amount and direction (+ or ?) of theinventory and accounts payable adjustments to net income in theoperating activities section of the statement of cash flows?
7-b. What does this amount represent?
8-a. If the company debited income tax expense and creditedincome taxes payable $1,660 during the year, what is the totalamount of the debits recorded in the Income Taxes Payableaccount?
8-b. What does the amount of these debits represent?
9-a. What is the amount and direction (+ or ?) of the incometaxes payable adjustment to net income in the operating activitiessection of the statement of cash flows?
9-b. What does this adjustment represent?
10. Would the operating activities section of the company’sstatement of cash flows contain an adjustment for a gain or a loss?What would be the amount and direction (+ or ?) of theadjustment?

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3.9 Ratings (573 Votes)

1 Ending balance Beginning Balance Difference Cash Cash Equivalent 11360000 13660000 2300000 The net decrease in cash and cash equivalent equal to 23000 decrease in cash balance from 136600 to 11360023000 shown in the balance sheet 2 Net IncomeEnding Retained EarningBeginning Retained EarningsDividend Net Income12500013300013200 520000 3 2 Depreciation ExpenseEnding Accumulated Depreciation Beginning Accumulated DepreciationAccumulated Depreciation on assets sold Depreciation See Answer

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Ravenna Company is a merchandiser that uses the indirect methodto prepare the operating activities section of its statement ofcash flows. Its balance sheet for this year is as follows:Ending Balance Beginning BalanceCash and cash equivalents $ 113,600 $ 136,600Accounts receivable 89,800 96,800Inventory 120,600 110,000Total current assets 324,000 343,400Property, plant, and equipment 318,000 308,000Less accumulated depreciation 106,000 77,000Net property, plant, and equipment 212,000 231,000Total assets $ 536,000 $ 574,400Accounts payable $ 70,400 $ 125,000Income taxes payable 54,600 74,400Bonds payable 132,000 110,000Common stock 154,000 132,000Retained earnings 125,000 133,000Total liabilities and stockholders’ equity $ 536,000 $574,400During the year, Ravenna paid a $13,200 cash dividend and itsold a piece of equipment for $6,600 that had originally cost$15,600 and had accumulated depreciation of $10,400. The companydid not retire any bonds or repurchase any of its own common stockduring the year.1. What is the amount of the net increase or decrease in cashand cash equivalents that would be shown on the company’s statementof cash flows?2. What net income would the company include on its statement ofcash flows?3.How much depreciation would the company add to net income onits statement of cash flows?4-a. If the company debited Accounts Receivable and creditedSales for $1,320,000 during the year, what is the total amount ofcredits recorded in Accounts Receivable during the year?4-b. What does the amount of these credits represent?5-a. What is the amount and direction (+ or ?) of the accountsreceivable adjustment to net income in the operating activitiessection of the statement of cash flows?5-b. What does this adjustment represent?6-a. If the company debited cost of goods sold and creditedinventory for $880,000 during the year, what is the total amount ofinventory purchases recorded on the debit side of the InventoryT-account and the credit side of the Accounts PayableT-account?6-b. What is the total amount of the debits recorded in theAccounts Payable T-account during the year?6-c. What does the amount of these debits represent?7-a. What is the combined amount and direction (+ or ?) of theinventory and accounts payable adjustments to net income in theoperating activities section of the statement of cash flows?7-b. What does this amount represent?8-a. If the company debited income tax expense and creditedincome taxes payable $1,660 during the year, what is the totalamount of the debits recorded in the Income Taxes Payableaccount?8-b. What does the amount of these debits represent?9-a. What is the amount and direction (+ or ?) of the incometaxes payable adjustment to net income in the operating activitiessection of the statement of cash flows?9-b. What does this adjustment represent?10. Would the operating activities section of the company’sstatement of cash flows contain an adjustment for a gain or a loss?What would be the amount and direction (+ or ?) of theadjustment?