Statement of Cash Flows-Indirect Method The comparative balance sheet of Olson-J

Question

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 Accounts receivable (net) Inventories Land Equipment Accumulated depreciation-equipment $209 118 74 170 95 (26) $640 $65 82 45 185 71 (13) $435 Total Assets Liabilities and Stockholders' Equity Accounts payable (merchandise creditors) Dividends payable Common stock, $1 par Paid-in capital: Excess of issue price over par- common stock Retained earnings $81 13 42 $65 20 109 51 395 299 Total liabilities and stockholders' equity $640 $435

Explanation / Answer

Cash Flow Statement is as prepared below:

Olson-Jones Industries Inc net cash flow from operations is less than net Income.

Olson-Jones Industries Inc. Statement of Cash Flows For the Year Ended December 31,20Y2 Cash Flows From Operating Activities Net Income (Given) 138 Adjustments to reconcile net income to Net Cash Provided by Operating Activities Depreciation Expense 13 Gain on sale of land (38- (185-170) -23 Increase in Accounts Receivable (118-82) -36 Increase in Inventories (74-45) -29 Increase in accounts payable (81-65) 16 -59 Net Cash Provided by Operating Activities 79 Cash Flows From Investing Activities Purchase of Equipment -24 Sale of Land 38 Net Cash Provided by Investing Activities 14 Cash Flows From Financing Activites Common Stock issued 80 Payments of Cash Dividends -29 Net Cash Used by Financing Activities 51 Net Increase in Cash 144 Cash at Beginning of the Year 65 Cash at end of Year 209

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