Question

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	$	52,800	$	62,700
Accounts receivable		45,100		48,400
Inventory		60,500		55,000
Total current assets		158,400		166,100
Property, plant, and equipment		165,000		154,000
Less accumulated depreciation		55,000		38,500
Net property, plant, and equipment		110,000		115,500
Total assets	$	268,400	$	281,600
Accounts payable	$	35,200	$	62,700
Income taxes payable		27,500		30,900
Bonds payable		66,000		55,000
Common stock		77,000		66,000
Retained earnings		62,700		67,000
Total liabilities and stockholders’ equity	$	268,400	$	281,600

During the year, Ravenna paid a $6,600 cash dividend and it solda piece of equipment for $3,300 that had originally cost $6,600 andhad accumulated depreciation of $4,400. The company did not retireany bonds or repurchase any of its own common stock during theyear.

1.	What is the amount of the net increase or decrease in cash andcash equivalents that would be shown on the company’s statement ofcash flows?
3.	How much depreciation would the company add to net income on itsstatement of cash flows?
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?

	Cash collected from customers < Credit sales
	Cash collected from customers > Credit sales
	Cash payments > Cash collected

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?

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