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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 99 250 330 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: 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?

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Accounting

27th Edition
WARREN + 5 others
Publisher: Cengage Learning,
ISBN: 9781337272094
BuyFind

Accounting

27th Edition
WARREN + 5 others
Publisher: Cengage Learning,
ISBN: 9781337272094

Solutions

Chapter
Section
Chapter 16, Problem 16.17EX
Textbook Problem

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
  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:

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?

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Chapter 16 Solutions

Accounting
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