Question

he 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	$489.00	$156.00
4	Accounts receivable (net)	283.00	197.00
5	Inventories	174.00	112.00
6	Land	398.00	445.00
7	Equipment	228.00	172.00
8	Accumulated depreciation-equipment	(65.00)	(32.00)
9	Total assets	$1,507.00	$1,050.00
10	Liabilities and Stockholders’ Equity
11	Accounts payable (merchandise creditors)	$177.00	$155.00
12	Dividends payable	30.00
13	Common stock, $1 par	96.00	49.00
14	Paid-in capital: Excess of issue price over par—common stock	250.00	130.00
15	Retained earnings	954.00	716.00
16	Total liabilities and stockholders’ equity	$1,507.00	$1,050.00

The following additional information is taken from the records:

A.	Land was sold for $129.
B.	Equipment was acquired for cash.
C.	There were no disposals of equipment during the year.
D.	The common stock was issued for cash.
E.	There was a $339 credit to Retained Earnings for net income.
F.	There was a $101 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. 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. In the operating activities section, use the minus sign to indicate cash outflows, decreases in cash and a net cash out flow, if required. In the investing and financing activities section, use a minus sign only to indicate a NET cash outflow for the section.

B.

Was Olson-Jones’s net cash flow from operations more or less than net income? What is the source of this difference?

X

Labels and Amount Descriptions

Labels and Amount Descriptions
Amortization of intangible assets
Cash paid for dividends
Cash paid for purchase of equipment
Cash received from sale of common stock
Cash received from sale of land
Change in cash
December 31, 20Y2
Decrease in accounts payable
Decrease in accounts receivable
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 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

Answer 1

Olson-Jones Industries Inc.
Statement of Cash flows
For the Year Ended December 31, 20Y2
Cash flows from operating activities
Net Income		$    339
Adjustments to reconcile net income to ;
Depreciation	$     33
Gain on sale of land	$   (82)		129-(445-398)
Increase in accounts receivable	$   (86)
Increase in inventory	$   (62)
Increase in accounts payable	$     22
		$ (175)
Net cash cash flow from operating activities		$    164
Cash flows from investing activities
Cash paid for purchase of equipment	$   (56)
Cash received from sale of land	$   129
Net cash flow from investing activities		$       73
Cash flows from financing activities
Cash paid for dividends	$   (71)		30-101
Cash received from sale of common stock	$   167
Net cash flow from financing activities		$       96
Change in cash		$    333
Cash and cash equivalents at beginning of period		$    156
Cash and cash equivalents at end of period		$    489

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