Question

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[The following information applies to the questions displayed below.] Ravenna Company is a merchandiser that uses...

[The following information applies to the questions displayed below.]

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:

Ending Balance Beginning Balance
Cash and cash equivalents $ 110,200 $ 132,350
Accounts receivable 87,800 94,600
Inventory 117,900 107,500
Total current assets 315,900 334,450
Property, plant, and equipment 312,000 301,000
Less accumulated depreciation 104,000 75,250
Net property, plant, and equipment 208,000 225,750
Total assets $ 523,900 $ 560,200
Accounts payable $ 68,800 $ 122,200
Income taxes payable 53,400 71,500
Bonds payable 129,000 107,500
Common stock 150,500 129,000
Retained earnings 122,200 130,000
Total liabilities and stockholders’ equity $ 523,900 $ 560,200

During the year, Ravenna paid a $12,900 cash dividend and it sold a piece of equipment for $6,450 that had originally cost $15,000 and had accumulated depreciation of $10,000. The company did not retire any bonds or repurchase any of its own common stock during the year.

10A) 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?

10B) What is the amount of net cash provided by (used in) operating activities in the company’s statement of cash flows?

10C) What is the amount of gross cash outflows reported in the investing section of the company’s statement of cash flows?

10D) What is the company’s net cash provided by (used in) investing activities?

10E) What is the amount of gross cash inflows reported in the financing section of the company’s statement of cash flows?

10F) What is the company’s net cash provided by (used in) financing activities?

Solutions

Expert Solution

(A) Adjustment for gain on sale of Equipment: -$1,450

(B) Net Cash used in Operating Activities: $32,700

(C) Gross cash outflow from Investing Activities: $26,000

(D) Net Cash used in Investing Activities : $19,550

(E) Gross cash inflow from Financial Activities : $43,000

(F) Net Cash provided by Financing Activities : $30,100

ekkarill92 answered 1 year ago
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