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 and cash equivalents $ 118,400   $ 142,300 Accounts receivable   93,900     101,200 Inventory   126,100     115,000 Total current assets   338,400     358,500 Property, plant, and equipment   333,000     322,000 Less accumulated depreciation   111,000     80,500 Net property, plant, and equipment   222,000     241,500 Total assets $ 560,400   $ 600,000             Accounts payable $ 73,600   $ 130,700 Income taxes payable   57,100     77,300 Bonds payable   138,000     115,000 Common stock   161,000     138,000 Retained earnings   130,700     139,000 Total liabilities and stockholders’ equity $ 560,400   $ 600,000     During the year, Ravenna paid a $13,800 cash dividend and it sold a piece of equipment for $6,900 that had originally cost $16,200 and had accumulated depreciation of $10,800. The company did not retire any bonds or repurchase any of its own common stock during the year.   Foundational 13-7 7-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?

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The Foundational 15 [LO13-1, LO13-2]

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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 and cash equivalents $ 118,400   $ 142,300
Accounts receivable   93,900     101,200
Inventory   126,100     115,000
Total current assets   338,400     358,500
Property, plant, and equipment   333,000     322,000
Less accumulated depreciation   111,000     80,500
Net property, plant, and equipment   222,000     241,500
Total assets $ 560,400   $ 600,000
           
Accounts payable $ 73,600   $ 130,700
Income taxes payable   57,100     77,300
Bonds payable   138,000     115,000
Common stock   161,000     138,000
Retained earnings   130,700     139,000
Total liabilities and stockholders’ equity $ 560,400   $ 600,000
 

 

During the year, Ravenna paid a $13,800 cash dividend and it sold a piece of equipment for $6,900 that had originally cost $16,200 and had accumulated depreciation of $10,800. The company did not retire any bonds or repurchase any of its own common stock during the year.

 

Foundational 13-7

7-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?

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