Ravenna Company is a merchandiser using 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 $ 89,000 $ 106,750 Accounts receivable 71,500 77,000 Inventory 96,000 87,500 Total current assets 256,500 271,250 Property, plant, and equipment 255,000 245,000 Less accumulated depreciation 85,000 61,250 Net property, plant, and equipment 170,000 183,750 Total assets $ 426,500 $ 455,000 Accounts payable $ 56,000 $ 99,500 Income taxes payable 43,500 57,000 Bonds payable 105,000 87,500 Common stock 122,500 105,000 Retained earnings 99,500 106,000 Total liabilities and stockholders’ equity $ 426,500 $ 455,000 During the year, Ravenna paid a $10,500 cash dividend and sold a piece of equipment for $5,250 that originally cost $12,000 and had accumulated depreciation of $8,000. The company did not retire any bonds or repurchase any of its own common stock during the year. 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?
Ravenna Company is a merchandiser using 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 $ 89,000 $ 106,750 Accounts receivable 71,500 77,000 Inventory 96,000 87,500 Total current assets 256,500 271,250 Property, plant, and equipment 255,000 245,000 Less accumulated depreciation 85,000 61,250 Net property, plant, and equipment 170,000 183,750 Total assets $ 426,500 $ 455,000 Accounts payable $ 56,000 $ 99,500 Income taxes payable 43,500 57,000 Bonds payable 105,000 87,500 Common stock 122,500 105,000 Retained earnings 99,500 106,000 Total liabilities and stockholders’ equity $ 426,500 $ 455,000 During the year, Ravenna paid a $10,500 cash dividend and sold a piece of equipment for $5,250 that originally cost $12,000 and had accumulated depreciation of $8,000. The company did not retire any bonds or repurchase any of its own common stock during the year. 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?
Financial And Managerial Accounting
15th Edition
ISBN:9781337902663
Author:WARREN, Carl S.
Publisher:WARREN, Carl S.
Chapter13: Statement Of Cash Flows
Section: Chapter Questions
Problem 3PB: Statement of cash flowsindirect method The comparative balance sheet of Coulson, Inc. at December...
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Ravenna Company is a merchandiser using 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 | $ 89,000 | $ 106,750 |
Accounts receivable | 71,500 | 77,000 |
Inventory | 96,000 | 87,500 |
Total current assets | 256,500 | 271,250 |
Property, plant, and equipment | 255,000 | 245,000 |
Less |
85,000 | 61,250 |
Net property, plant, and equipment | 170,000 | 183,750 |
Total assets | $ 426,500 | $ 455,000 |
Accounts payable | $ 56,000 | $ 99,500 |
Income taxes payable | 43,500 | 57,000 |
Bonds payable | 105,000 | 87,500 |
Common stock | 122,500 | 105,000 |
Retained earnings | 99,500 | 106,000 |
Total liabilities and |
$ 426,500 | $ 455,000 |
During the year, Ravenna paid a $10,500 cash dividend and sold a piece of equipment for $5,250 that originally cost $12,000 and had accumulated depreciation of $8,000. The company did not retire any bonds or repurchase any of its own common stock during the year.
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?
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