Question

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		$168		$54
Accounts receivable (net)		96		67
Inventories		60		37
Land		137		151
Equipment		77		59
Accumulated depreciation-equipment		(21)		(11)
	Total Assets	$517		$357
Liabilities and Stockholders' Equity
Accounts payable (merchandise creditors)		$65		$54
Dividends payable		10		-
Common stock, $1 par		34		17
Paid-in capital: Excess of issue price over par—common stock		87		42
Retained earnings		321		244
	Total liabilities and stockholders' equity	$517		$357

The following additional information is taken from the records:

Land was sold for $35.

Equipment was acquired for cash.

There were no disposals of equipment during the year.

The common stock was issued for cash.

There was a $111 credit to Retained Earnings for net income.

There was a $34 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?

Answer 1

Olson-Jones Industries Inc.
Statement of Cash Flows
For the Year Ended December 31, 20Y2
Cash flows from operating activities:
Net Income	111
Adjustments to reconcile net income to net cash flow from operating activities:
Add: Depreciation expense	10
Less: Gain on sale of land	-21	100	35-(151-137)
Changes in current operating assets and liabilities:
Less: Increase in accounts receivable	-29
Less: Increase in Inventories	-23
Add: Increase in accounts payable	11	-41
Net cash flow from operating activities		59
Cash flows from (used for) investing activities:
Sale of land	35
Purchase of equipment	-18
Net cash flow from investing activities		17
Cash flows from (used for) financing activities:
Issue of common stock	62
Dividend paid	-24
Net cash flow from financing activities		38
Net cash flow during the year		114
Cash at the beginning of the year		54
Cash at the end of the year		168
Net cash flow from operations is less than Net Income