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. 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?
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. 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?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Ravenna Company is a merchandiser using the indirect method to prepare the operating activities section of its statement of
| Ending Balance | Beginning Balance | |
|---|---|---|
| Cash and cash equivalents | $ 89,000 | $ 106,750 |
| 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 |
| 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.
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?
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