Question

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

1		Dec. 31, 20Y2	Dec. 31, 20Y1
2	Assets
3	Cash	$485.00	$163.00
4	Accounts receivable (net)	285.00	198.00
5	Inventories	170.00	112.00
6	Land	395.00	454.00
7	Equipment	220.00	180.00
8	Accumulated depreciation-equipment	(58.00)	(32.00)
9	Total assets	$1,497.00	$1,075.00
10	Liabilities and Stockholders’ Equity
11	Accounts payable (merchandise creditors)	$174.00	$155.00
12	Dividends payable	28.00
13	Common stock, $1 par	105.00	48.00
14	Paid-in capital: Excess of issue price over par—common stock	245.00	123.00
15	Retained earnings	945.00	749.00
16	Total liabilities and stockholders’ equity	$1,497.00	$1,075.00

The following additional information is taken from the records:

1.	Land was sold for $123.
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 $294 credit to Retained Earnings for net income.
6.	There was an $98 debit to Retained Earnings for cash dividends declared.

Required:

A.

Prepare a statement of cash flows, using the indirect method of presenting cash flows from operating activities. Refer to the Labels and Amount Descriptions list provided for the exact wording of the answer choices for text entries. Be sure to complete the heading of the statement. Use the minus sign to indicate cash out flows, cash payments, decreases in cash, or any negative adjustments.

B.

Was the net cash flow from operations for Olson-Jones Industries Inc. more or less than net income? What is the source of this difference? Labels and Amount Descriptions Amortization of intangible assets Cash used for dividends Cash used for purchase of equipment Cash from sale of common stock Cash from sale of land December 31, 20Y2 Decrease in accounts payable Decrease in accounts receivable Decrease in cash Decrease in inventories Depreciation For the Year Ended December 31, 20Y2 Gain on sale of land Increase in accounts payable Increase in accounts receivable Increase in cash Increase in inventories Loss on sale of land Net cash flow from operating activities Net cash flow used for operating activities Net cash flow from investing activities Net cash flow used for investing activities Net cash flow from financing activities Net cash flow used for financing activities Net income Net loss A. Prepare a statement of cash flows, using the indirect method of presenting cash flows from operating activities. Refer to the Labels and Amount Descriptions list provided for the exact wording of the answer choices for text entries. Be sure to complete the heading of the statement. 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 1 Cash flows from operating activities: 2 3 Adjustments to reconcile net income to net cash flow from operating activities: 4 5 6 Changes in current operating assets and liabilities: 7 8 9 10 11 Cash flows from (used for) investing activities: 12 13 14 15 Cash flows from (used for) financing activities: 16 17 18 19 20 Cash at the beginning of the year 21 Cash at the end of the year    B. Was the net cash flow from operations for Olson-Jones Industries Inc. more or less than net income? What is the source of this difference? Net cash flow from operations was than net income. The source(s) of the difference are: Check all that apply. Depreciation expense Sale of common stock Changes in current operating assets and liabilities Purchase of equipment Gain on the sale of land Dividends paid

Answer 1

Olson-Jones Industries Inc.
Statement of Cash Flows
	For the Year Ended December 31, 20Y2
1	Cash flows from operating activities:
2	Adjustments to reconcile net income to net cash flow from operating activities:
3	Net income	294
4	Depreciation	26
5	Gain on sale of land	-64
6	Changes in current operating assets and liabilities:
7	Increase in accounts receivable	-87
8	Increase in inventories	-58
9	Increase in accounts payable	19
10	Net cash flow from operating activities		130
11	Cash flows from (used for) investing activities:
12	Cash used for purchase of equipment	-40
13	Cash from sale of land	123
14	Net cash flow from investing activities		83
15	Cash flows from (used for) financing activities:
16	Cash from sale of common stock	179
	Dividend Paid	-70
17	Net cash flow from financing activities		109
18	Increase in cash		322
19	Cash at the beginning of the year		163
20	Cash at the end of the year		485

Gain on sale of land
Sales	123
Cost of land Sold =454-395	59
Gain on sale of land	64