Question

1. The comparative balance sheet of Olson-Jones Industries Inc. for December 31, 20Y2 and 20Y1, is as follows:

   		Dec. 31, 20Y2		Dec. 31, 20Y1
   Assets
   Cash		$109		$34
   Accounts receivable (net)		62		43
   Inventories		39		23
   Land		89		98
   Equipment		50		37
   Accumulated depreciation-equipment		(13)		(7)
   	Total Assets	$336		$228
   Liabilities and Stockholders' Equity
   Accounts payable (merchandise creditors)		$42		$34
   Dividends payable		7		-
   Common stock, $1 par		22		11
   Paid-in capital: Excess of issue price over par—common stock		59		27
   Retained earnings		206		156
   	Total liabilities and stockholders' equity	$336		$228

   The following additional information is taken from the records:

   1. Land was sold for $23.
   2. Equipment was acquired for cash.
   3. There were no disposals of equipment during the year.
   4. The common stock was issued for cash.
   5. There was a $72 credit to Retained Earnings for net income.
   6. There was a $22 debit to Retained Earnings for cash dividends declared.

   a. Prepare a statement of cash flows, using the indirect method of presenting cash flows from operating activities. Use the minus sign to indicate cash out flows, cash payments, decreases in cash, or any negative adjustments.

   Olson-Jones Industries Inc.
   Statement of Cash Flows
   For the Year Ended December 31, 20Y2
   Cash flows from operating activities:
   Net income	$
   Adjustments to reconcile net income to net cash flow from operating activities:
   Changes in current operating assets and liabilities:
   Net cash flow from operating activities		$
   Cash flows from (used for) investing activities:
   	$
   Net cash flow from investing activities
   Cash flows from (used for) financing activities:
   	$
   Net cash flow from financing activities
   		$
   Cash at the beginning of the year
   Cash at the end of the year		$

   b. Was Olson-Jones Industries Inc.’s net cash flow from operations more or less than net income?
   

2. The comparative balance sheet of Merrick Equipment Co. for December 31, 20Y9 and 20Y8, is as follows:

   		Dec. 31, 20Y9		Dec. 31, 20Y8
   Assets
   Cash		$242,170		$225,010
   Accounts receivable (net)		87,730		80,810
   Inventories		247,650		239,290
   Investments		0		92,700
   Land		127,020		0
   Equipment		273,240		211,540
   Accumulated depreciation—equipment		(63,970)		(57,050)
   	Total assets	$913,840		$792,300
   Liabilities and Stockholders' Equity
   Accounts payable		$165,410		$156,080
   Accrued expenses payable		16,450		20,600
   Dividends payable		9,140		7,130
   Common stock, $10 par		49,350		38,820
   Paid-in capital: Excess of issue price over par-common stock		185,510		107,750
   Retained earnings		487,980		461,920
   	Total liabilities and stockholders’ equity	$913,840		$792,300

   Additional data obtained from an examination of the accounts in the ledger for 20Y9 are as follows:

3. Equipment and land were acquired for cash.
4. There were no disposals of equipment during the year.
5. The investments were sold for $83,430 cash.
6. The common stock was issued for cash.
7. There was a $63,300 credit to Retained Earnings for net income.
8. There was a $37,240 debit to Retained Earnings for cash dividends declared.

Required:

Prepare a statement of cash flows, using the indirect method of presenting cash flows from operating activities. Use the minus sign to indicate cash outflows, cash payments, decreases in cash, or any negative adjustments.

Merrick Equipment Co.
Statement of Cash Flows
For the Year Ended December 31, 20Y9
Cash flows from operating activities:
	$
Adjustments to reconcile net income to net cash flow from operating activities:
Changes in current operating assets and liabilities:
Net cash flow from operating activities		$
Cash flows from (used for) investing activities:
	$
Net cash flow used for investing activities
Cash flows from (used for) financing activities:
Net cash flow from financing activities
		$
Cash at the beginning of the year
Cash at the end of the year

Answer 1

1. Olson-Jones Industries Inc. -

a. Cash Flow Statement -

b. Olson-Jones Industries Inc.’s net cash flow from operations is less than net income.

Net cash flow from operations = $58

Net income = $72

2. Merrick Equipment Co. - Cash Flow Statement -

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