Statement of cash flows—indirect method Obj. 2, 3, 4, 5 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:

a. Land was sold for $120.

b. Equipment was acquired for cash.

c. There were no disposals of equipment during the year.

d. The common stock was issued for cash.

e. There was a $62 credit to Retained Earnings for net income.

f. 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’s net cash flow from operations more or less than net income? What is the source of this difference?

AppendixLO1