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 $130,000 $156,500 accounts receivable 102,000 110,000 inventory 137,000 125,000 total current assets 369,000 391,500 property, plant, and equipment 360,000 350,000 less accumulated depreciation 120,000 87,500 net property, plant, and equipment 240,000 262,500 total assets $609,000 $654,000 accounts payable $80,000 $142,000 income taxes payable 62,000 86,000 bonds payable 150,000 125,000 common stock 175,000 150,000 retained earnings 142,000 151,000 total liabilities and stockholders’ equity $609,000 $654,000 during the year, ravenna paid a $15,000 cash dividend and it sold a piece of equipment for $7,500 that had originally cost $18,000 and had accumulated depreciation of $12,000. the company did not retire any bonds or repurchase any of its own common stock during the year.

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?

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  

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