What is the amount and direction or of the accounts

Assignment Help Accounting Basics

Reference no: EM13570233

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	$	48,000	$	57,000
Accounts receivable		41,000		44,000
Inventory		55,000		50,000
Property, plant, and equipment		150,000		140,000
Less accumulated depreciation		(50,000)		(35,000)

Total assets	$	244,000	$	256,000

Accounts payable	$	32,000	$	57,000
Income taxes payable		25,000		28,000
Bonds payable		60,000		50,000
Common stock		70,000		60,000
Retained earnings		57,000		61,000

Total liabilities and stockholders' equity	$	244,000	$	256,000

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.

1. Required:

What is the amount of the net increase or decrease in cash and cash equivalents that would be shown on the company's statement of cash flows? (Input the amount as positive value.)

Net (Click to select)decreaseincrease in cash and cash equivalents

2. Required:

What net income would the company include on its statement of cash flows?

Net income

3. Required:

How much depreciation would the company add to net income on its statement of cash flows?

Depreciation

4. Required:

a.	If the company credited sales and debited accounts receivable for $600,000 during the year, what is the total amount of credits recorded in accounts receivable during the year?

Amount of credits recorded

What does the amount of these credits represent?

	Total sales
	Cash sales
	Credit sales
	Cash collections from customers
	Payment to suppliers

Assume that company credited sales and debited accounts receivable for $600,000 during the year.

5. Required:

a.	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? (Input the amount as positive value.)

Amount

(Click to select)Added to net incomeDeducted from net income

What does this adjustment represent?

Cash payments > Cash collected

Cash collected from customers > Credit sales

Cash collected from customers < Credit sales

6. Required:

a.	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?

Purchases

b-1.	What is the total amount of the debits recorded in the Accounts Payable T-account during the year?

Total amount of debits recorded

b-2.

What does the amount of these debits represent?

	Purchases
	Supplier payments
	Sales
	Cash collections

Assume that the company debited cost of goods sold and credited inventory for $400,000 during the year.

7. Required:

a.	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? (Input the amount as positive value.)

Amount

(Click to select)Added to net incomeDeducted from net income

What does this amount represent?

	Cash paid to suppliers < Cost of goods sold
	Cash paid to suppliers > Purchases
	Cash paid to suppliers > Cost of goods sold

8. Required:

a.	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?

Total amount of debits recorded

What does the amount of these debits represent?

	Taxes payable
	Cash paid for income taxes
	Tax refunds

Assume that the company debited income tax expense and credited income taxes payable $25,000 during the year.

9. Required:

a.	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? (Input the amount as positive value.)

Amount

(Click to select)Added to net incomeDeducted from net income

What does this adjustment represent?

	Tax paid < Income tax expenses
	Tax paid > Income tax expenses
	No taxes are payable

10. Required:

Would the operating activities section of the company's statement of cash flows contain an adjustment for a gain or a loss?

	No
	Yes

b.	What would be the amount and direction ( + or ? ) of the adjustment? (Input the amount as positive value.)

(Click to select)Gain ofLoss of $ (Click to select)Deducted from net incomeAdded to net income

11. Required:

What is the amount of net cash provided by (used in) operating activities in the company's statement of cash flows? (Input the amount as positive value.)

Net cash (Click to select)provided byused in operating activities

12. Required:

What is the amount of gross cash outflows reported in the investing section of the company's statement of cash flows? (Input the amount as positive value.)

Gross cash outflows

13. Required:

What is the company's net cash provided by (used in) investing activities? (Input the amount as positive value.)

Net cash (Click to select)used inprovided by investing activities

14. Required:

What is the amount of gross cash inflows reported in the financing section of the company's statement of cash flows?

15. Required:

What is the company's net cash provided by (used in) financing activities? (Input the amount as positive value.)

Net cash (Click to select)provided byused in financing activities

Gross cash inflows

Reference no: EM13570233

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