CH15

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School

University of Missouri, St. Louis *

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5421

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Accounting

Date

Apr 3, 2024

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pptx

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Key chm‘:ept #3 Computing the net cash provided by operating activities using the indirect method is a three-step process: Step 1 Step 2 Step 3 Operating activities Net income Adjustments to convert net income to a cash basis: A Add: Depreciation . [ Analyze net changes in noncash balance sheet accounts: Increase in current asset accounts Decrease in current asset accounts Increase in current liability accounts | Decrease in current liability accounts " Adjust for gains/losses: 1 Gain on sale . Loss on sale Net cash provided by (used in) operating activities $xx XX Current Assets Accounts receivable Inventory Prepaid expenses Current Liabilities Accounts payable Accrued liabilities Income taxes payable Increase in Account Balance Subtract Subtract Subtract Add Add Add Decrease in Account Balan: Add Add Add Subtract Subtract Subtract For the year just completed, Hanna Company had net income of $68,000. Balances in the company’s current asset a current liability accounts at the beginning and end of the year were as follows: Current assets: Cash and cash equivalents Accounts receivable Inventory Prepaid expenses Current liabilities: Accounts payable Accrued liabilities Income taxes payable December 31 End of Year Beginning of Year $62,000 $84,000 $ 150,000 $ 184,000 $ 445,000 $ 349,000 $12,000 $ 14,000 $ 362,000 $ 386,000 $8,500 $ 11,500 $ 35,000 $29,000 Change - $34,000 + $96,000 -$2,000 The Accumulated Depreciation account had total credits of $48,000 during the year. Hanna Company did not record & gains or losses during the year.

1 - Hanna Company — — Statement of Cash Flows—Indirect Method (partial) ;Net income v F's 68.000ji Adjustments to convert net income to a cash basis: v § 48,000 Decrease in accounts receivable v Increase in inventory v Decrease in accrued liabilities v Increase in income taxes payable v v - (33,000) Net cash provided by operating activities v = d 35,000

Free cash _ flow Net cash provided by operating — Capital expenditures — Dividends activities ( Basic Equation for Accumulated Depreciation Account (Rearranged) Beginning balance - Debits - Ending balance = Credits el General Guidelines for Analyzing How Changes in Noncash Balance Sheet Accounts Affect the Investing Section of the Statement of Cash Flows N I S| : Increase in Decrease in Batance o Account Balance Account Balance Noncurrent Assets Property, plant, and equipment. . ........ Subtract Add Long-terminvestments. .. .............. Subtract Add Loanstootherentities. . ........... cco... Subtract Add \ General Guidelines for Analyzing How Changes in Noncash Balance Sheet Accounts Affect the Financing Section of the Statement of Cash Flows Increase in Decrease in loncash Batance Sheet Accounts Account Balance Account Balance Liabilities and Stockholders’ Equity Bonds payable Add Subtract Common stock ..... Add Subtract Retained earnings. . . *Requires further analysis to quantify cash dividends paid.

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Basic Equation for Asset Accounts Beginning balance + Debits — Credits = Ending balance Basic Equation for Contra-asset, Liability, and Stockholders™ Equity Accounts Beginning balance — Debits + Credits = Ending balance Question © Answered Asked by MajorSalamander288 Nickson Company did not issue any bonds and the company's Bonds Payable account decreased by $45,000 during the year. The beginning balance in the company's Retained Earnings was $2,000, its ending balance is $23,000, and the company reported net income of $32,200. The company also paid a cash dividend during the year. Based on the above information, what is the net cash provided by (used in) financing activities? Answer SolvedbyAl © BUSINESS ACCOUNTING The net cash provided by (used in) financing activities can be calculated by considering the changes in the company's equity and debt during the year. In this case, the company's Bonds Payable account decreased by $45,000. This means that the company paid off $45,000 of its bonds during the year, which is a use of cash. The company's Retained Earnings increased from $2,000 to $23,000, which is an increase of $21,000. However, the company also reported net income of $32,200. The increase in Retained Earnings is less than the net income because the company paid a dividend during the year. The dividend payment can be calculated as follows: Net income - Increase in Retained Earnings = Dividend payment $32,200 - $21,000 = $11,200 The dividend payment is also a use of cash. Therefore, the net cash provided by (used in) financing activities is the sum of the cash used to pay off bonds and the cash used to pay dividends: -$45,000 (cash used to pay off bonds) - $11,200 (cash used to pay dividends) = -$56,200 So, the net cash used in financing activities is $56,200.

Required information [The following information applies to the questions displayed below.] Ravenna Company is @ 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 Beginning Balance Balance Cash and cash eguivalents $ 130,000 £ 156,500 Accounts receivable 102,000 110,000 Inventory 137,000 125,000 Total current assets 369,000 391,500 Property, plant, and equipment 360,000 350,000 Less accumulated depreciation 120,000 87,500 Net property, plant, and equipment 240,000 262,500 Total assets $ 609,000 $ 654,000 Accounts payable $ 80,000 $ 142,000 Income taxes payable 62,000 86,000 Bonds payable 150,000 125,000 Common stock 175,000 150,000 Retained earnings 142,000 151,000 Total liabilities and stockholders’ equity $ 609,000 $ 654,000 During the year, Ravenna paid a $15,000 cash dividend and sold a piece of equipment for $7,500 that originally cost $18,000 and had accumulated depreciation of $12,000. The company did not retire any bonds or repurchase any of its own common stock during the year. Required: 1. What net change in cash and cash equivalents would be shown on the company’s statement of cash flows? Net |decrease (@ |in cash and cash equivalents | <} Explanation 1. The net change In cash and cash equivalents would be a decrease of $26,500 (from $156,500 to $130,000) as shown on the balance sheet.

Ravenna Company is @ 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 Beginning Balance Balance Cash and cash eguivalents $ 130,000 $ 156,500 Accounts receivable 102,000 110,000 Inventory 137,000 125,000 Total current assets 369,000 391,508 Property, plant, and eguipment 360,000 350,000 Less accumulated depreciation 120,000 87,500 Net property, plant, and equipment 240,000 262,500 Total assets $ 629,000 $ 654,000 Accounts payable $ 80,000 $ 142,000 Income taxes payable 62,000 86,000 Bonds payable 150,000 125,008 Common_stock 175,000 159,000 Retained earnings 142,000 151,200 Total liabilities and stockholders® equity $ 609,000 $ 654,000 During the year, Ravenna paid a $15,000 cash dividend and sold a piece of equipment for $7,500 that originally cost $18,000 and had accumulated depreciation of $12,000. 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? Neticome | Explanation 2 The basic equation for stockholders™ equity accounts can be applied to the Retained earnings account to compute the net Income of $6,000 as follows: Beginning balance - Debits + Credits = Ending balance $151,000 - $15,000 + Credits = $142,000 $136,000 + Credits = $142,000 Credits = $6,000

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&l ne rvnvwvyin Iy mavirrniagouvin U,J,./IICD Vit yucouuvinie UID,.IIUJCU UCIUVV.J’ 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 Beginning Balance Balance Cash and cash eguivalents $ 130,000 $ 156,500 Accounts receivable 102,000 119,000 Inventory 137,000 125,000 Total current assets 369,000 391,500 Property, plant, and eguipment 360,000 350,000 Less accumulated depreciation 120,000 87,500 Net property, plant, and equipment 249,000 262,500 Total assets $ 609,000 $ 654,000 Accounts payable $ 80,000 $ 142,000 Income taxes payable 62,000 86,000 Bonds payable 150,009 125,000 Common stock 175,000 150,000 Retained earnings 142,000 151,000 Total liabilities and stockholders’ equity $ 609,000 $ 654,000 During the yeary Ravenna paid a $15,000 cash dividend and sold a piece of equipment for $7,500 that originally cost $18,000 and had accumulated depreciation of $12,000. The company did not retire any bonds or repurchase any of its own common stock during the year. \ 3. How much depreciation would the company add to net income on its statement of cash flows? [Depreciation s 55000 | Explanation 3. The baslic eguation for contra-asset accounts can be applied to the Accumulated depreciation account to compute the depreciation of $44 500 that needs to be added to net Income as follows: Beginning balance - Debits + Credits = Ending balance $87,500 - $12,000 + Credits = $120,000 $75,500 + Credits = $120,000 Credits = $44 500

Required information [The following information applies to the questions displayed below.] Ravenna Company is @ 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 Beginning Balance Balance Explanation Cash and cash eguivalents $ 130,000 $ 156,500 Accounts receivable 102,000 110,000 4-a. Inventory 137,000 125,000 Total current assets 369,000 391,500 . Property, plant, and eguipment 360,000 350,000 . Accounts Receivable . Less accumulated depreciation 120,000 87,500 Debit Credit Net property, plant, and equipment 249,000 262,500 Beginning balance 110,000 Total assets $ 609,000 $ 654,000 Sales on account 1,440,000 | Cash collections 1,448,000 Accounts payable $ 80,000 $ 142,000 Ending balance 102,000 Income taxes payable 62,000 86,000 Bonds payable 150,000 125,000 Common stock 175,000 150,000 4-b. The total amount of credits recorded In accounts recelvable Is $1,448 000. This amount represents the cast Retained earnings 142,000 151,000 Total liabilities and stockholders’ equity $ 609,000 $ 654,000 During the year, Ravenna paid a $15,000 cash dividend and sold a piece of equipment for $7,500 that originally cost $18,000 and had accumulated depreciation of $12,000. The company did not retire any bonds or repurchase any of its own common stock during the year. -a. If the company debited Accounts Receivable and credited Sales for $1,440,000 during the year, what is the total amount of credits ecorded in Accounts Receivable during the year? -b. What does the amount of these credits represent? Complete this question by entering your answers in the tabs below. Req 4A Req 4B If the company debited Accounts Receivable and credited Sales for $1,440,000 during the year, what is the total amount of credits recorded in Accounts Receivable during the year? Amount of credits recorded | |

Ravenna Company is @ 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: Cash and cash eguivalents Accounts receivable Inventory Total current assets Property, plant, and eguipment Less accumulated depreciation Net property, plant, and equipment Total assets Accounts payable Income taxes payable Bonds payable Common stock Retained earnings Total liabilities and stockholders’ equity Ending Beginning Balance Balance $ 130,000 $ 156,500 102,000 110,000 137,000 125,000 369,000 391,500 360,000 350,000 120,000 87,500 249,000 262,500 $ 609,000 $ 654,000 $ 80,000 $ 142,000 62,000 86,000 150,000 125,000 175,000 150,000 142,000 151,000 $ 609,000 ¢ 654,000 Explanation 5-3. Accounts Receivable Debit Credit Beginning balance 110,000 Sales on account 1,440,000 | Cash collections 1,448,000 Ending balance 102,000 The total amount of credits recorded In accounts recelvable Is $1,448.000. 5-b. The accounts recelvable balance decreased by $8,000; therefore, the $8,000 decrease Is added to net Income. that cash collections from customers of $1,448,000 were $8,000 higher than the credit sales of $1,440,000 included | During the year, Ravenna paid a $15,000 cash dividend and sold a piece of equipment for $7,500 that originally cost $18,000 and had accumulated depreciation of $12,000. The company did not retire any bonds or repurchase any of its own common stock during the year. 3 E What does this adjustment represent? s @ Cash collected from customers > Credit sales a. What are the amount and direction (+ or —) of the accounts receivable adjustment to net income in the operating activities section the statement of cash flows? b. What does this adjustment represent? Complete this question by entering your answers in the tabs below. Req SA Reqg 5B What are the amount and direction (+ or -) of the accounts receivable adjustment to net income in the operating activities section of the statement of cash flows? mount [ [added to net income () Cash collected from customers < Credit sales () Cash payments > Cash collected

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Required information Cash and cash equivalents Accounts receivable Inventory Total current assets Property, plant, and eguipment Less accumulated depreciation Net property, plant, and equipment Total assets Accounts payable Income taxes payable Bonds payable Common stock Retained earnings Total liabilities and stockholders’ equity own common stock during the year. [The following information applies to the questions displayed below.] 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 Beginning Balance Balance $ 130,000 $ 156,508 102,000 119,000 137,000 125,000 369,000 391,500 360,000 350,000 120,000 87,500 249,000 262,500 $ 609,000 $ 654,000 $ 80,000 $ 142,000 62,000 86,000 150,000 125,000 175,080 150,000 142,000 151,000 $ 609,000 $ 654,000 During the year, Ravenna paid a $15,000 cash dividend and sold a piece of equipment for $7,500 that originally cost $18,000 and had accumulated depreciation of $12,000. The company did not retire any bonds or repurchase any of its 6-a. If the company debited cost of goods sold and credited inventory for $1,000,000 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? 6-b. What is the total amount of the debits recorded in the Accounts Payable T-account during the year? 6-c. What does the amount of these debits represent? Req 6A Req 6B Req 6C If the company debited cost of goods sold and credited inventory for $1,000,000 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? - $1,012,000 Req 6B > Explanation 6-a. Inventory Debit Credit Beginning balance 125,000 Purchases 1,012,000 | Cost of goods sold 1,000,000 Ending balance 137,000 6-b. Accounts Payable Debit Credit Beginning balance 142,000 Supplier payments 1,074,000 | Purchases 1,012,000 Ending balance 80,000 6-C. The total amount of Inventory purchases debited to Inventory and credited to accounts payable Is $1,012,000. Therefore, the total amount of the debits to accounts payable Is $1,074,000. The debits to accounts payable represents the total cash paid to suppliers. Complete this question by entering your answers in the tabs below. Req 6A Req 6B Req 6C What is the total amount of the debits recorded in the Accounts Payable T-account during the year? molntof bt fecorded [ s 1.074.000] Explanation 6-a. Inventory Debit Credit Beginning balance 125,000 Purchases 1,012,000 | Cost of goods sold 1,000,000 Ending balance 137,000 6-b. Accounts Payable Debit Credit Beginning balance 142,000 Supplier payments 1,074,000 | Purchases 1,012,000 Ending balance 80,000 6-c. The total amount of Inventory purchases debited to inventory and credited to accounts payable Is $1,012,000. Therefore, the total amount of the debits 0 accounts payable Is $1,074,000. The debits to accounts payable represents the total cash paid to suppliers.

7-b. What does this amount represent? Required inf i i i i i equired information Complete this question by entering your answers in the tabs below. [The following information applies to the questions displayed below.] Ravenna Company is @ merchandiser using the indirect method to prepare the operating activities sectic of cash flows. Its balance sheet for this year is as follows: Req 7A Req 7B Ending Beginning _ Balance Balance What is the combined amount and direction (+ or —) of the inventory and accounts payable adjustments to net income in the Cash and cash equivalents $ 130,000 $ 156,500 operating activities section of the statement of cash flows? Accounts receivable 102,000 119,000 Inventory 137,000 125,000 - Total current assets 369,000 391,500 E’lomt I s 74,000rdeducted from net income |vl Property, plant, and eguipment 360,000 350,000 Less accumulated depreciation 120,000 87,500 Net property, plant, and equipment 249,000 262,500 - Mm P Total assets $ 609,000 $ 654,000 Accounts payable $ 80,000 $ 142,000 Income taxes payable 62,000 86,000 Bonds payable 150,080 125,000 Common stock 175,000 159,000 Retained earnings 142,000 151,200 Total liabilities and stockholders’ equity $ 609,000 $ 654,000 During the year, Ravenna paid a $15,000 cash dividend and sold a piece of equipment for $7,500 that o1 $18,000 and had accumulated depreciation of $12,000. The company did not retire any bonds or repurc own common stock during the year. 7-a. What is the combined amount and direction (+ or —) of the inventory and accounts payable adjustments to Explanation operating activities section of the statement of cash flows? 7-b. What does this amount represent? 7 Inventory Debit Credit Beginning balance 125,000 Purchases 1,012,000 | Cost of goods sold 1,000,000 Ending balance 137,000 Accounts Payable Debit Credit Beginning balance 142,000 Supplier payments 1,074,000 | Purchases 1,012,000 Ending balance 80,000 The Inventory balance Increased by $12,000; therefore, this amount Is subtracted from net income. The accounts payable balance decreased by $62.000; therefore, this amount Is also subtracted from net iIncome. The combined amount of these adjustments Is a $74,000 deduction from ne Income. This adjustment reflects the fact that cash paid to suppliers of $1,074,000 Is $74,000 higher than the cost of goods sold of $1,000,000 Included In the Income statement.

- Required information [The following information applies to the questions displayed below.] Ravenna Company is @ 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 Beginning Balance Balance Cash and cash eguivalents $ 130,000 ¢ 156,500 Accounts receivable 102,000 119,000 Inventory 137,000 125,000 Total current assets 369,000 391,500 Property, plant, and equipment 360,000 350,000 Less accumulated depreciation 120,000 87,5008 Net property, plant, and equipment 240,000 262,500 Total assets $ 609,090 g 654, 200 Accounts payable $ 80,000 $ 142,000 Income taxes payable 62,000 86,000 Bonds payable 159,909 125,000 Common stock 175,000 150,000 Retained earnings 142,000 151,000 Total liabilities and stockholders’ equity $ 609,000 % 654,000 During the year, Ravenna paid a $15,000 cash dividend and sold a piece of equipment for $7,500 that originally cost $18,000 and had accumulated depreciation of $12,000. The company did not retire any bonds or repurchase any of its own common stock during the year. axes payable $1,900 during the year, what is the total amount of dw. ayable $1,900 during the year, what is the total - 8-a. If the company debited income tax expense and credited income taxes payable $1,900 during the year, what is the total amount of the debits recorded in the Income Taxes Payable account? 8-b. What does the amount of these debits represent? 8-a. Income Taxes Payable Credit Tax payments 25,900 Beginning balance Taxes payable 86,000 1,900 Ending balance 62,000 8-b. The total amount of debits recorded In Income taxes payable Is $25,900. This amount represents the cash pald for Income taxes.

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9-a. What are 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? 9-b. What does this adjustment represent? Complete this question by entering your answers in the tabs below. Req SA Req SB What are 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? Amount I s 24,000[deducted from net income [~] Explanation O-a. Income Taxes Payable Debit Credit Beginning balance 86,000 Tax payments 25,900 | Taxes payable 1,900 Ending balance 62,000 The total amount of debits recorded In Income taxes payable Is $25,900. 9-b. The Income taxes payable balance decreased by $24,000; therefore, the $24,000 decrease Is subtracted from net Income. This adjustment reflects the fact that cash paid for Income taxes of $25,900 Is $24,000 higher than the income tax expense of $1,900 included In the Income statement.

[The following information applies to the questions displayed below.] Ravenna Company is @ 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 Beginning Balance Balance Cash and cash eguivalents $ 130,000 $ 156,500 Accounts receivable 102,000 110,000 Inventory 137,000 125,000 Total current assets 369,000 391,500 Property, plant, and eguipment 360,000 350,000 Less accumulated depreciation 120,000 87,500 Net property, plant, and equipment 249,000 262,500 Total assets $ 609,000 g 654,090 Accounts payable $ 80,000 $ 142,000 Income taxes payable 62,000 86,000 Bonds payable 150,080 125,000 Common stock 175,000 150,000 Retained earnings 142,000 151,000 Total liabilities and stockholders’ equity $ 609,000 $ 654,000 During the year, Ravenna paid a $15,000 cash dividend and sold a piece of equipment for $7,500 that originally cost $18,000 and had accumulated depreciation of $12,000. The company did not retire any bonds or repurchase any of its own common stock during the year. 10. 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? rGain of | 'r S 1,500rdeducted from net income | vl Explanation 10. The operating activities section of the statement of cash flows would contain an adjustment related to a gain on the sale of a piece of equipment. The equipment was sold for $2500 and It had a book value at the time of Its sale of $6.000 (=$18.000 original cost — $12,000 of accumulated depreciation); therefore, the company would record a $1,500 gain on the sale (= $7,500 cash proceeds — $6,000 book value). This amount would be subtracted from net income In the operating activities section of the statement.

Cash and cash eguivalents $ 130,000 $ 156,500 Accounts receivable 102,000 119,000 Inventory 137,000 125,000 Total current assets 369,000 391,500 Property, plant, and eguipment 360,000 350,000 Less accumulated depreciation 120,000 87,500 Net property, plant, and equipment 240,000 262,500 Total assets $ 629,000 % 654,000 Accounts payable $ 80,000 $ 142,000 Income taxes payable 62,000 86,000 Bonds payable 150,000 125,000 Common stock 175,000 150,000 Retained earnings 142,000 151,000 Total liabilities and stockholders’ equity $ 629,000 % 654,000 During the year, Ravenna paid a $15,000 cash dividend and sold a piece of equipment for $7,500 that originally cost $18,000 and had accumulated depreciation of $12,000. The company did not retire any bonds or repurchase any of its own common stock during the year. - 11. What is the company’s net cash provided by (used in) operating activities? Net cash fusedin | ~ |operating activities F's (41,000)] Explanation 11. The net cash provided by (used In) operating activities would be computed as follows: Net income $ 6,000 Adjustments to convert net income to a cash basis: Depreciation $ 44,500 Decrease in accounts receivable 8,000 Increase in inventory (12,000) Decrease in accounts payable (62,000) Decrease in income taxes payable (24,000) Gain on sale of equipment (1,500) (47,000) Net cash used in operating activities $ (41,000)

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Ending Beginning Balance Balance Cash and cash eguivalents $ 130,000 $ 156,500 Accounts receivable 102,000 119,000 Inventory 137,000 125,000 Total current assets 369,000 391, 500 Property, plant, and eguipment 360,000 350,000 Less accumulated depreciation 120,000 87,500 Net property, plant, and equipment 240,000 262,500 Total assets $ 609,000 $ 654,000 Accounts payable $ 80,000 $ 142,000 Income taxes payable 62,000 86,000 Bonds payable 150,080 125,000 Common stock 175,000 150,000 Retained earnings 142,000 151,000 Total liabilities and stockholders’ equity $ 609,000 % 654,000 During the year, Ravenna paid a $15,000 cash dividend and sold a piece of equipment for $7,500 that originally cost $18,000 and had accumulated depreciation of $12,000. The company did not retire any bonds or repurchase any of its own common stock during the year. 12. What are the gross cash outflows in the investing section of the company’s statement of cash flows? |Gross cash outflows s 28,000] Explanation 12. The gross cash outflows of $28,000 can be computed by applying the basic equation for assets to the Property, plant, and eguipment account as follows: Beginning balance + Debits — Credits = Ending balance $350,000 + Debits - $18,000 = $360,000 Debits = $360,000 - $350,000 + $18,000 Debits = $28,000

13. What is the company’s net cash provided by (used in) investing activities? Net cash fusedin |~ |investing activities s (20500 Explanation 13. The gross cash outflows of $28,000 can be computed by applying the basic equation for assets 1o the Property, plant, and equipment account as follows: Beginning balance + Debits — Credits = Ending balance $350,000 + Debits — $18,000 = $360,000 Debits = $360,000 - $350,000 + $18,000 Debits = $28,000 The net cash provided by (used In) Investing activities Is $(20,500). This amount Includes the $(28,000) cash outflow related to the purchase of property, plant, and equipment (as computed above) and the $7,500 cash Inflow from the sale of equipment.

14. What are the gross cash inflows in the financing section of the company’s statement of cash flows? |Gross cash inflows [ s 50,000 Explanation 14. The following table can be used to analyze the changes In noncash balance sheet accounts that Impact financing cash flows as follows: Increase in Decrease in Account Account Balance Balance Liabilities and stockholders’ equity Bonds payable + 25,000 Common stock + 25,000 Because Ravenna did not retire any bonds or repurchase any of Its own common stock during the year, the corresponding amounts In the table above represent the gross cash Inflows that are Included In financing section of the statement of cash flows.

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15. What is the company’s net cash provided by (used in) financing activities? Net cash Forovided by '~ | financing activities s 35,000 Explanation 15. The following table can be used to analyze the changes In noncash balance sheet accounts that Impact financing cash flows as follows: Increase in Decrease in Account Account Balance Balance Liabilities and stockholders’ equity Bonds payable + 25,000 Common stock + 25,000 Because Ravenna did not retire any bonds or repurchase any of Its own common stock during the year, the corresponding amounts In the table above represent the gross cash Inflows that are included In financing section of the statement of cash flows. The cash Inflows of $50,000 from the Issuance of bonds and common stock (as computed above) minus the cash dividend of $15,000 equals net cash provided by (used In) financing activities of $35,000.

CH15

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