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

The following additional information is taken from the records:

1. Land was sold for $153.

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 $79 credit to Retained Earnings for net income.

6. There was a $31 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 Hirayama Industries Inc.’s net cash flow from operations more or less than net income? What is the source of this difference?

Transcribed Image Text:

Dec. 31, 20Y2 Dec. 31, 20Y1 Assets Cash.. $234 $ 18 Accounts receivable (net). 70 63 Inventories.. 150 127 320 422 Land. Equipment. Accumulated depreciation-equipment. Total assets.. ...... 262 224 ... (87) (54) S800 $949 Liabilities and Stockholders' Equity $ 65 $ 47 Accounts payable (merchandise creditors)... Dividends payable... Common stock, $1 par. Paid-in capital in excess of par. Retained earnings 160 102 109 90 609 $949 561 $800 Total liabilities and stockholders'equity..