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 BalanceCash$48,000 $57,000Accounts receivable 41,000 44,000Inventory 55,000 50,000Total current assets 144,000 151,000Property, plant, and equipment 150,000 140,000Less accumulated depreciation 50,000 35,000Net property, plant, and equipment 100,000 105,000Total assets$244,000 $256,000 Accounts payable$32,000 $57,000Income taxes payable 25,000 28,000Bonds payable 60,000 50,000Common stock 70,000 60,000Retained earnings 57,000 61,000Total 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. 2. What net income would the company include on its statement of cash flows?

Net Income = Ending Balance of Retained Earnings + Dividends Paid - Beginning Balance of Retained…

Answered: Ravenna Company is a merchandiser that…

Financial Accounting Intro Concepts Meth/Uses

14th Edition

ISBN:9781285595047

Author:Weil

Publisher:Weil

Chapter6: Statement Of Cash Flows

Section: Chapter Questions

Problem 15E

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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
Total current assets		144,000			151,000
Property, plant, and equipment		150,000			140,000
Less accumulated depreciation		50,000			35,000
Net property, plant, and equipment		100,000			105,000
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.

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

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12. What is the amount of gross cash outflows reported in the investing section of the company’s statement of cash flows?

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