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 $64,400 $76,900
Accounts receivable 53,200 57,200
Inventory 71,400 65,000
Total current assets 189,000 199,100
Property, plant, and equipment 192,000 182,000
Less accumulated depreciation 64,000 45,500

Net property, plant, and equipment 128,000 136,500
Total assets $317,000 $335,600

Accounts payable $41,600 $74,000
Income taxes payable 32,400 39,600
Bonds payable 78,000 65,000
Common stock 91,000 78,000
Retained earnings 74,000 79,000

Total liabilities and stockholders’ equitY$317,000 $335,600
During the year, Ravenna paid a $7,800 cash dividend and it sold a piece of equipment for $3,900 that had originally cost $8,400 and had accumulated depreciation of $5,600. The company did not retire any bonds or repurchase any of its own common stock during the year.
Required:
1. What is the amount of the net increase or decrease in cash and cash equivalents that would be shown on the company’s statement of cash flows?
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?
7-b. What does this amount represent?
Cash paid to suppliers > Cost of goods sold
Cash paid to suppliers > Purchases
Cash paid to suppliers < Cost of goods sold
8-a. If the company debited income tax expense and credited income taxes payable $940 during the year, what is the total amount of the debits recorded in the Income Taxes Payable account?
9-a. What is 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?
Tax paid < Income tax expenses
No taxes are payable
Tax paid > Income tax expenses
11. What is the amount of net cash provided by (used in) operating activities in the company’s statement of cash flows?
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?
8-b. What does the amount of these debits represent?
Tax refunds
Cash paid for income taxes
Taxes payable
12.What is the amount of gross cash outflows reported in the investing section of the company’s statement of cash flows?
13.What is the company’s net cash provided by (used in) investing activities?
14.What is the amount of gross cash inflows reported in the financing section of the company’s statement of cash flows?
15.What is the company’s net cash provided by (used in) financing activities?