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		$183		$14
   Accounts receivable (net)		55		49
   Inventories		117		99
   Land		250		330
   Equipment		205		175
   Accumulated depreciation—equipment		(68)		(42)
   	Total assets	$742		$625
   Liabilities and Stockholders' Equity
   Accounts payable (merchandise creditors)		$51		$37
   Dividends payable		5		-
   Common stock, $1 par		125		80
   Paid-in capital: Excess of issue price over par—common stock		85		70
   Retained earnings		476		438
   	Total liabilities and stockholders' equity	$742		$625

   The following additional information is taken from the records:

   1. Land was sold for $120.
   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 $62 credit to Retained Earnings for net income.
   6. There was a $24 debit to Retained Earnings for cash dividends declared.

   a. Prepare a statement of cash flows, using the indirect method of presenting The section of the statement of cash flows that reports the cash transactions affecting the determination of net income.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:
   Cash received from sale of common stock Decrease in accounts receivable Increase in inventories Net income	$
   Adjustments to reconcile net income to net cash flow from operating activities:
   Decrease in accounts receivable Depreciation Increase in accounts receivable Loss on sale of land
   Decrease in inventories Gain on sale of land Increase in accounts payable Loss on sale of land
   Changes in current operating assets and liabilities:
   Decrease in accounts receivable Decrease in inventories Depreciation Increase in accounts receivable
   Decrease in accounts payable Decrease in accounts receivable Decrease in inventories Increase in inventories
   Decrease in accounts payable Depreciation Increase in accounts payable Cash paid for dividends
   Net cash flow from operating activities		$
   Cash flows from (used for) investing activities:
   Cash from sale of land Depreciation Gain on sale of land Cash paid for dividends	$
   Cash used for purchase of equipment Depreciation Increase in inventories Cash paid for purchase of equipment
   Net cash flow from investing activities
   Cash flows from (used for) financing activities:
   Cash from sale of common stock Cash received from sale of land Decrease in accounts payable Depreciation	$
   Cash used for dividends Cash received from sale of land Decrease in inventories Increase in accounts receivable
   Net cash flow from financing activities
   Decrease in cash Increase in cash		$
   Cash at the beginning of the year
   Cash at the end of the year		$

   Feedback

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

   • Less
   • More

Answer 1

	Statement of cash flow (Indirect method)
Cash flow from operating activities
net income for the year				62
Adjustments to reconcile net income from
operating activities
Depreciation expense				26
Gain on sale of land				-40
chanage in current opening assets & liabilities
increase in account receivable				-6
increase in inventory				-18
increase in accounts payable				14
Cash flow from operating activities					38
cash flow from investing activities
cash from sale of land				120
cash used for purchase of Equipment				-30
cash flow from investing activities					90
cash flow from financing activity
cash from stock issue				60
cash paid for dividend				-19
cash flow from financing activity					41
net increase in cash					169
cash at beginning of the year					14
cash at year end					183
less