Question

1.

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		$192		$60
Accounts receivable (net)		109		75
Inventories		68		41
Land		156		171
Equipment		88		66
Accumulated depreciation-equipment		(24)		(12)
	Total Assets	$589		$401
Liabilities and Stockholders' Equity
Accounts payable (merchandise creditors)		$74		$60
Dividends payable		12		-
Common stock, $1 par		39		19
Paid-in capital: Excess of issue price over par—common stock		101		47
Retained earnings		363		275
	Total liabilities and stockholders' equity	$589		$401

The following additional information is taken from the records:

1. Land was sold for $38.
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 $127 credit to Retained Earnings for net income.
6. There was a $39 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		$

2.

Statement of Cash Flows—Indirect Method

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		$256,460		$237,740
Accounts receivable (net)		92,910		85,390
Inventories		262,260		252,810
Investments		0		97,940
Land		134,520		0
Equipment		289,360		223,510
Accumulated depreciation—equipment		(67,740)		(60,270)
	Total assets	$967,770		$837,120
Liabilities and Stockholders' Equity
Accounts payable		$175,170		$164,910
Accrued expenses payable		17,420		21,770
Dividends payable		9,680		7,530
Common stock, $10 par		52,260		41,020
Paid-in capital: Excess of issue price over par-common stock		196,460		113,850
Retained earnings		516,780		488,040
	Total liabilities and stockholders’ equity	$967,770		$837,120

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

1. Equipment and land were acquired for cash.
2. There were no disposals of equipment during the year.
3. The investments were sold for $88,150 cash.
4. The common stock was issued for cash.
5. There was a $68,080 credit to Retained Earnings for net income.
6. There was a $39,340 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		$

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

Answer 1

1. Answer:

Calculations: