During the year ravenna paid a 6000 cash dividend and it

Reference no: EM13571404

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	$	48,000	$	57,000
Accounts receivable		41,000		44,000
Inventory		55,000		50,000
Property, plant, and equipment		150,000		140,000
Less accumulated depreciation		(50,000)		(35,000)

Total assets	$	244,000	$	256,000

Accounts payable	$	32,000	$	57,000
Income taxes payable		25,000		28,000
Bonds payable		60,000		50,000
Common stock		70,000		60,000
Retained earnings		57,000		61,000

Total liabilities and stockholders' equity	$	244,000	$	256,000

During the year Ravenna paid a $6,000 cash dividend and it sold a piece of equipment for $3,000 that had originally cost $6,000 and had accumulated depreciation of $4,000. The company did not retire any bonds or repurchase any of its own common stock during the year.

Required:

a.	If the company debited cost of goods sold and credited inventory for $400,000 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?

Purchases

b-1.

What is the total amount of the debits recorded in the Accounts Payable T-account during the year?

Total amount of debits recorded

b-2.

What does the amount of these debits represent?

	Purchases
	Supplier payments
	Cash collections
	Sales

Reference no: EM13571404

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