Statement of Cash Flows-Indirect Method The comparative balance sheet of Olson-J
ID: 340922 • Letter: S
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) $140 80 S0 115 6S (17) $45 57 31 129 50 Land Equipment Accumulated depreciation-equipment 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 $303 $45 29 67 273 209 Total liabilities and stockholders' equity $433 $303 The following additional information is taken from the records: 1. Land was sold for $35. 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 $93 credit to Retained Earnings for net income. 6. There was a $29 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:Explanation / Answer
(a)
Cash flows from operating activities
93
Adjustments to reconcile net income to cashflow from operating activities
Depreciation on equipment (17-9)
8
Gain from sale of land (35 - [129 - 115])
-21
Changes in current operating assets and liabilities
Increase in accounts receivable
-23
Increase in inventory
-19
Increase in accounts payable
10
Net cash flow from operating activities
48
Cash flows from (used for) investing activities
Sale of land
35
Purchase of equipment (65 -50)
-15
Net cashflow from investing activities
20
Cash flows from (used for) financing activities
Issue of common stock ( [29 -14] + [67 - 35] )
47
Dividend paid (29 -9)
-20
Net cashflow from financing activities
27
95
Cash at the beginning of the year
45
Cash as the end of the year
140
(b) Net income from cash flow operations = $48 which is lower than the net income of $93.
Cash flows from operating activities
93
Adjustments to reconcile net income to cashflow from operating activities
Depreciation on equipment (17-9)
8
Gain from sale of land (35 - [129 - 115])
-21
Changes in current operating assets and liabilities
Increase in accounts receivable
-23
Increase in inventory
-19
Increase in accounts payable
10
Net cash flow from operating activities
48
Cash flows from (used for) investing activities
Sale of land
35
Purchase of equipment (65 -50)
-15
Net cashflow from investing activities
20
Cash flows from (used for) financing activities
Issue of common stock ( [29 -14] + [67 - 35] )
47
Dividend paid (29 -9)
-20
Net cashflow from financing activities
27
95
Cash at the beginning of the year
45
Cash as the end of the year
140
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