Answer:
Ravenna Company reports a Net Decrease in Cash and Cash Equivalents of $ 26,500 in Statement of Cash flows.
Explanation:
Ravenna Company
Statement of Cash flows
Net Profit $6,000
Adjustment of Non Cash Expenses
Depreciation $20,500
Gain on Sale of Equipment $(1,500)
Working Capital Changes
Increase in Inventory $(12,000)
Decrease in Accounts Receivables $8,000
Decrease in Accounts Payables $(62,000)
Net cash from operating activities $(41,000)
Cash flows from Investing Activities
Proceeds from sale of equipment $7,500
Purchase of Equipment $(28,000)
Net cash from investing activities $(20,500)
Cashflow from Financing Activities
Proceeds from issue of shares $25,000
Proceeds from issue of Notes Payables $25,000
Dividends paid $(15,000)
Net cash from Financing Activities $35,000
Net decrease in cash and cash equivalents $(26,500)
Opening cash and cash equivalents $156,500
Closing cash and cash equivalents $130,000
Please note that:
- figures in brackets represent negative figures
- complete solution is attached in excel file
- Operating Activities section of Statement of Cashflow begins by ''Net Profit before Taxes''. However, the question data does not provide any information on the amount of Tax charged during the year, so, 'Net Profit for the year' is used instead.
