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 | $115 | $38 | |||
| Accounts receivable (net) | 66 | 48 | |||
| Inventories | 41 | 26 | |||
| Land | 94 | 109 | |||
| Equipment | 53 | 42 | |||
| Accumulated depreciation-equipment | (14) | (7) | |||
| Total Assets | $355 | $256 | |||
| Liabilities and Stockholders' Equity | |||||
| Accounts payable (merchandise creditors) | $45 | $38 | |||
| Dividends payable | 7 | - | |||
| Common stock, $1 par | 23 | 12 | |||
| Paid-in capital: Excess of issue price over par—common stock | 51 | 30 | |||
| Retained earnings | 229 | 176 | |||
| Total liabilities and stockholders' equity | $355 | $256 | |||
The following additional information is taken from the records:
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: | ||
| $ | ||
| Adjustments to reconcile net income to net cash flow from operating activities: | ||
| Changes in current operating assets and liabilities: | ||
| Net cash flow from operating activities | $ | |
| Cash flows from (used for) investing activities: | ||
| $ | ||
| Net cash flow from investing activities | ||
| Cash flows from (used for) financing activities: | ||
| $ | ||
| Net cash flow from financing activities | ||
| $ | ||
| Cash at the beginning of the year | ||
| Cash at the end of the year | $ | |
b. Was Olson-Jones Industries Inc.’s net cash
flow from operations more or less than net income?
| Answer = A) | ||
| Statement of Cash Flows - Indirect Method | ||
| Amount in $ | Amount in $ | |
| Cash flows from operating activities | ||
| Net income | $ 76 | |
| Adjustments to reconcile net income to net cash flow from operating activities: | ||
| Depreciation | $ 7 | |
| Gain on sale of land | $ -23 | |
| $ -16 | ||
| Changes in current operating assets and liabilities: | ||
| Increase in Account receivables | $ -18 | |
| Increase in inventories | $ -15 | |
| Increase in Account Payable | $ 7 | |
| $ -26 | ||
| Net cash from operating activities | $ 34 | |
| Cash flows from investing activities | ||
| Sale of Land | $ 38 | |
| Purchase of Equipment | $ -11 | |
| Net cash used in investing activities | $ 27 | |
| Cash flows from Financing activities | ||
| Dividend Paid (23-7) | $ -16 | |
| Issue of Common Stock /Paid in capital in excess of issue price ($ 11 + $ 21) | $ 32 | |
| Net cash used in financing activities | $ 16 | |
| Net increase in cash and cash equivalents | $ 77 | |
| Add :Cash and cash equivalents at beginning of period | $ 38 | |
| Cash and cash equivalents at end of period | $ 115 | |
| CALCULATION OF GAIN OR LOSS ON SALE OF LAND | ||
| Sales Value of Land | 38 | |
| Less: Cost of Sales (109-94) | 15 | |
| Profit on sale of land | 23 | |
| Answer = B) | ||
| Olson-Jones Industries Inc.’s net cash flow from operations is less than net income | ||
Statement of Cash Flows—Indirect Method The comparative balance sheet of Olson-Jones Industries Inc. for December 31,...
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 $114 $36 Accounts receivable (net) 65 45 Inventories 41 25 Land 94 102 Equipment 53 39 Accumulated depreciation-equipment (14) (7) Total Assets $353 $240 Liabilities and Stockholders' Equity Accounts payable (merchandise creditors) $44 $36 Dividends payable 7 - Common stock, $1 par 23 11 Paid-in capital: Excess of issue price...
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 $193 $62 Accounts receivable (net) 110 77 Inventories 69 42 Land 158 175 Equipment 89 67 Accumulated depreciation-equipment (24) (12) Total Assets $595 $411 Liabilities and Stockholders' Equity Accounts payable (merchandise creditors) $75 $62 Dividends payable 12 - Common stock, $1 par 39 19 Paid-in capital: Excess of issue price...
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 $197 $65 Accounts receivable (net) 113 81 Inventories 71 44 Land 161 183 Equipment 91 71 Accumulated depreciation-equipment (24) (12) Total Assets $609 $432 Liabilities and Stockholders' Equity Accounts payable (merchandise creditors) $77 $65 Dividends payable 12 - Common stock, $1 par 40 20 Paid-in capital: Excess of issue price...
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 $136 $44 Accounts receivable (net) 78 55 Inventories 49 30 Land 112 127 Equipment 63 48 Accumulated depreciation-equipment (17) (9) Total Assets $421 $295 Liabilities and Stockholders' Equity Accounts payable (merchandise creditors) $53 $44 Dividends payable 8 - Common stock, $1 par 28 14 Paid-in capital: Excess of issue price...
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 $185 $60 Accounts receivable (net) 105 75 Inventories 66 41 Land 151 169 Equipment 85 65 Accumulated depreciation-equipment (23) (12) Total Assets $569 $398 Liabilities and Stockholders' Equity Accounts payable (merchandise creditors) $72 $60 Dividends payable 11 - Common stock, $1 par 38 19 Paid-in capital: Excess of issue price...
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 $192 $61 Accounts receivable (net) 109 76 Inventories 68 42 Land 156 172 Equipment 88 67 Accumulated depreciation-equipment (24) (12) Total Assets $589 $406 Liabilities and Stockholders' Equity Accounts payable (merchandise creditors) $74 $61 Dividends payable 12 - Common stock, $10 par 39 19 Paid-in capital: Excess of issue price...
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 $203 $65 Accounts receivable (net) 116 81 Inventories 73 44 Land 166 184 Equipment 93 71 Accumulated depreciation-equipment (25) (13) Total Assets $626 $432 Liabilities and Stockholders' Equity Accounts payable (merchandise creditors) $79 $65 Dividends payable 13 - Common stock, $10 par 41 20 Paid-in capital: Excess of issue price...
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 $107 $35 Accounts receivable (net) 62 44 Inventories 39 24 Land 88 101 Equipment 50 39 Accumulated depreciation-equipment (13) (7) Total Assets $333 $236 Liabilities and Stockholders' Equity Accounts payable (merchandise creditors) $42 $35 Dividends payable 7 - Common stock, $10 par 22 11 Paid-in capital: Excess of issue price...
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 $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 in excess of par—common...
tatement 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 $203 $66 Accounts receivable (net) 115 83 Inventories 72 46 Land 165 188 Equipment 93 72 Accumulated depreciation-equipment (25) (13) Total Assets $623 $442 Liabilities and Stockholders' Equity Accounts payable (merchandise creditors) $78 $66 Dividends payable 12 - Common stock, $10 par 41 21 Paid-in capital: Excess of issue price...