Question

Statement of Cash Flows—Indirect Method

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		$124		$40
Accounts receivable (net)		71		50
Inventories		45		27
Land		102		113
Equipment		57		43
Accumulated depreciation-equipment		(15)		(8)
	Total Assets	$384		$265
Liabilities and Stockholders' Equity
Accounts payable (merchandise creditors)		$48		$40
Dividends payable		8		-
Common stock, $1 par		25		12
Paid-in capital: Excess of issue price over par—common stock		63		31
Retained earnings		240		182
	Total liabilities and stockholders' equity	$384		$265

The following additional information is taken from the records:

1. Land was sold for $28.
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 $83 credit to Retained Earnings for net income.
6. There was a $25 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:
	$
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?

Thank you in advance, please show work.

Answer 1

Solution

Olson- Jones Industries Inc.
Statement of cash flows
For year ended December 31 20Y2
A. Cash Flows from Operating Activity
Net Income	$          83.00
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation expense	$             7.00
Gain on sale of Land	$        (17.00)
Changes in Current operating assets and liabilities
Increase in Accounts receivables	$        (21.00)
Increase in Inventories	$        (18.00)
Increase in Accounts Payable	$             8.00
Net cash flow from Operating activities		$         42.00
B. Cash flows from Investing Activities
Sale of land	$          28.00
Purchase of Equipment	$        (14.00)
Net Cash flows from Investing activities		$         14.00
C. Cash Flows from Financing activities
Issuance of Common Stock	$          45.00
Payments of dividends	$        (17.00)
Cash flows from Financing activities		$         28.00
Net Increase (Decrease) in Cash [A+B+C]		$         84.00
Cash at the beginning		$         40.00
Cash at the end		$      124.00

.Requirement b

Answer-------Less