Question
Asked Dec 21, 2019
10 views

The comparative balance sheet of Olson-Jones Industries Inc. for December 31, 20Y2 and 20Y1, is as follows:

Please see  the attachment for details:

The following additional information is taken from the records:
1. Land was sold for $120.
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 $62 credit to Retained Earnings for net income.
6. 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.
b. Was Olson-Jones Industries Inc.’s net cash flow from operations more or less than net income? What is the source of this difference?

Dec. 31, 20Y2
Dec. 31, 20Y1
Assets
$ 14
$183
Cash ...
.
Accounts receivable (net) .
55
49
Inventories
117
99
Land ....
250
330
Equipment....
205
175
Accumulated depreciation-equipment .
(42)
(68)
Total assets ..
$742
$625
Liabilities and Stockholders' Equity
$ 51
$ 37
Accounts payable (merchandise creditors)
Dividends payable.....
Common stock, $1 par....
Paid-in capital: Excess of issue price over par-common stock....
Retained earnings.....
Total liabilities and stockholders' equity..
125
80
85
70
438
476
$742
$625
help_outline

Image Transcriptionclose

Dec. 31, 20Y2 Dec. 31, 20Y1 Assets $ 14 $183 Cash ... . Accounts receivable (net) . 55 49 Inventories 117 99 Land .... 250 330 Equipment.... 205 175 Accumulated depreciation-equipment . (42) (68) Total assets .. $742 $625 Liabilities and Stockholders' Equity $ 51 $ 37 Accounts payable (merchandise creditors) Dividends payable..... Common stock, $1 par.... Paid-in capital: Excess of issue price over par-common stock.... Retained earnings..... Total liabilities and stockholders' equity.. 125 80 85 70 438 476 $742 $625

fullscreen
check_circle

Expert Answer

Step 1

Prepare the schedule of changes of current assets and current liabilities.

help_outline

Image Transcriptionclose

Schedule of changes of current assets and liabilities Increase Effect on Beginning Ending or balance operating activities balance Decrease Details Accounts receivable Inventories 6 Deduct 49 55 18 Deduct 14 Add 99 117 Accounts payable 37 51

fullscreen
Step 2

Calculations:

help_outline

Image Transcriptionclose

Calculate the amount of depreciation expense: Ending balance - Amount of depreciation expense ( Beginning balance, ($68 – $42) = $26 Calculate the amount gain on sale of land: Book value of land Beginning balance - Ending balance Amount gain on sale of land = - Sale value $80 ($330 – $250) -$120 = $40

fullscreen
Step 3

Calculatio...

help_outline

Image Transcriptionclose

Calculate the amount of cash used to purchase of equipment: Amount of cash used to Ending balance - Beginning balance purchase of equipment ($205 – $175) $30 Calculate the amount of cash from common stock: Ending balance - Beginning balance, (Paid in capital Ending balance Amount of cash from common stock - Beginning balance ($125 – $80) + ($85 – $75) = $45 + 10 = $60 %3| Calculate the amount of dividends: Balance of dividends Amount of dividends = Cash dividends declared ($5 – $24) = $19

fullscreen

Want to see the full answer?

See Solution

Check out a sample Q&A here.

Want to see this answer and more?

Solutions are written by subject experts who are available 24/7. Questions are typically answered within 1 hour.*

See Solution
*Response times may vary by subject and question.
Tagged in

Business

Accounting

Cash Flow Statements

Related Accounting Q&A

Find answers to questions asked by student like you
Show more Q&A
add
question_answer

Q: Please help.me to do part a and b. Thank you for your help

A: Requirement a: Prepare a bank reconciliation statement of Graser Company at December 31, 2019.

question_answer

Q: “When evaluating a company’s performance on the time dimension, managers should only consider nancia...

A: Click to see the answer

question_answer

Q: Discuss some measures that should be taken to maintain control over merchandise inventory.

A: Click to see the answer

question_answer

Q: Pacific Gas and Electric Company is a large gas and electric utility operating in northern and centr...

A: Earnings per share:  Earnings per share represent the amount of income earned per share of outstandi...

question_answer

Q: For the current year, Packers Company decided to switch from the indirect method to the direct metho...

A: Statement of cash flows: It is one of the financial statements that shows the cash and cash equivale...

question_answer

Q: What are the four steps involved in the closing process for a merchandising company?

A:  

question_answer

Q: On the first day of the fiscal year, Lisbon Co. issued $1,000,000 of 10-year, 7% bonds for $1,050,00...

A: Bonds: Bonds are long-term promissory notes that are issued by a company while borrowing money from ...

question_answer

Q: What are cash budgets? Give three examples?

A: Cash Budget: The cash budget is a part of the budgeted financial statements which is a plan for the ...

question_answer

Q: What does the gross profit percentage measure, and how is it calculated?

A: Gross margin percentage: The percentage of gross profit generated by every dollar of net sales is re...