Statement of Cash Flows—Indirect MethodThe comparative balance sheet of Olson-Jones Industries Inc. for December 31, 20Y2 and 20Y1, is as follows: Dec. 31, 20Y2Dec. 31, 20Y1Assets Cash$183 $14 Accounts receivable (net)55 49 Inventories117 99 Land250 330 Equipment205 175 Accumulated depreciation—equipment(68) (42) Total assets$742 $625 Liabilities and Stockholders' Equity Accounts payable (merchandise creditors)$51 $37 Dividends payable5 - Common stock, $1 par125 80 Paid-in capital in excess of par—common stock85 70 Retained earnings476 438 Total liabilities and stockholders' equity$742 $625 The following additional information is taken from the records:Land was sold for $120.Equipment was acquired for cash.There were no disposals of equipment during the year.The common stock was issued for cash.There was a $62 credit to Retained Earnings for net income.There was a $24 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 FlowsFor the Year Ended December 31, 20Y2Cash flows from (used for) operating activities: Net income $fill in the blank a0633c061fe5fe7_2 Adjustments to reconcile net income to net cash flow from operating activities: Depreciation fill in the blank a0633c061fe5fe7_4 Gain on sale of land fill in the blank a0633c061fe5fe7_6 Changes in current operating assets and liabilities: fill in the blank a0633c061fe5fe7_8 fill in the blank a0633c061fe5fe7_10 fill in the blank a0633c061fe5fe7_12 Net cash flow from operating activities $fill in the blank a0633c061fe5fe7_13Cash flows from (used for) investing activities: $fill in the blank a0633c061fe5fe7_15 fill in the blank a0633c061fe5fe7_17 Net cash flow from investing activities fill in the blank a0633c061fe5fe7_18Cash flows from (used for) financing activities: $fill in the blank a0633c061fe5fe7_20 fill in the blank a0633c061fe5fe7_22 Net cash flow from financing activities fill in the blank a0633c061fe5fe7_23 $fill in the blank a0633c061fe5fe7_25Cash balance, January 1, 20Y2 fill in the blank a0633c061fe5fe7_26Cash balance, December 31, 20Y2 $fill in the blank a0633c061fe5fe7_27 Feedback Calculate the increases and decreases in the current asset/liability accounts over the period. What affect do these increases/decreases have on cash? What items might have had an affect on net income but have no cash impact? What items are considered noncurrent assets?b. Was Olson-Jones’s net cash flow from operations more or less than net income? The source(s) of the difference are:Gain on the sale of landPurchase of equipmentSale of common stockChanges in current operating assets and liabilitiesDepreciation expenseDividends paid

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 stock 85 70 Retained earnings 476 438 Total liabilities and stockholders' equity $742 $625 The following additional information is taken from the records: Land was sold for $120. Equipment was acquired for cash. There were no disposals of equipment during the year. The common stock was issued for cash. There was a $62 credit to Retained Earnings for net income. There was a $24 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.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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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	$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 stock	85		70
Retained earnings	476		438
	Total liabilities and stockholders' equity	$742		$625

The following additional information is taken from the records:

Land was sold for $120.
Equipment was acquired for cash.
There were no disposals of equipment during the year.
The common stock was issued for cash.
There was a $62 credit to Retained Earnings for net income.
There was a $24 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 (used for) operating activities:
Net income	$fill in the blank a0633c061fe5fe7_2
Adjustments to reconcile net income to net cash flow from operating activities:
Depreciation	fill in the blank a0633c061fe5fe7_4
Gain on sale of land	fill in the blank a0633c061fe5fe7_6
Changes in current operating assets and liabilities:
	fill in the blank a0633c061fe5fe7_8
	fill in the blank a0633c061fe5fe7_10
	fill in the blank a0633c061fe5fe7_12
Net cash flow from operating activities		$fill in the blank a0633c061fe5fe7_13
Cash flows from (used for) investing activities:
	$fill in the blank a0633c061fe5fe7_15
	fill in the blank a0633c061fe5fe7_17
Net cash flow from investing activities		fill in the blank a0633c061fe5fe7_18
Cash flows from (used for) financing activities:
	$fill in the blank a0633c061fe5fe7_20
	fill in the blank a0633c061fe5fe7_22
Net cash flow from financing activities		fill in the blank a0633c061fe5fe7_23
		$fill in the blank a0633c061fe5fe7_25
Cash balance, January 1, 20Y2		fill in the blank a0633c061fe5fe7_26
Cash balance, December 31, 20Y2		$fill in the blank a0633c061fe5fe7_27

Feedback

Calculate the increases and decreases in the current asset/liability accounts over the period. What affect do these increases/decreases have on cash? What items might have had an affect on net income but have no cash impact? What items are considered noncurrent assets?

b. Was Olson-Jones’s net cash flow from operations more or less than net income?

The source(s) of the difference are:

Gain on the sale of land
Purchase of equipment
Sale of common stock
Changes in current operating assets and liabilities
Depreciation expense
Dividends paid

Expert Solution

Step 1

Dividends Declared = Net Income - (Ending Retained earnings - Beginning Retained earnings)

Dividends Declared = 62 - (476 - 438)

Dividends Declared = 24

Dividends Paid = Dividends Declared + Beginning Dividends payable - Ending Dividends payable

Dividends Paid = 24 + 0 - 5

Dividends Paid = 19

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