The comparative balance sheet of Olson-Jones Industries Inc. for December 31, 20
ID: 2509551 • Letter: T
Question
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: Excess of issue price over 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.
Explanation / Answer
Statement of cash flow cash from operating activities net income for the year 62 Adjustments to reconcile net income Depreciation expense 26 Gain on sale of land (120-80) -40 increase in accounts receivable -6 increase in inventory -18 increase in accounts payable 14 Net cash flow from operating activities 38 Cash from investing activities cash from sale of land 120 Cash used to purchase Equipment -30 Cash flow from investing activities 90 Cash from financing activities cash dividend -19 Cash from stock issue 60 Cash from financing activities 41 net increase in cash 169 cash at the beginning of the year 14 cash at year end 183