Solution 5-121

Johnston Enterprises
Statement of Cash Flows
For the Year Ended December 31, 2012

Net Income $ 176,000

Cash flow from operating activities

Depreciation expense 153,000
Loss on sale of equipment 12,000
Decrease in accounts receivable 78,000
Increase in inventory (51,000)
Increase in accounts payable 75,000
Decrease in notes payable (17,000)
Increase in tax payable 8,500 258,500
Net cash provided by operating activities 434,500

Cash flow from investing activities

Sale of equipment 22,000
Purchase of equipment (272,000)
Net cash used by investing activities (250,000)

Cash flow from financing activities

Retirement of bonds payable (41,000)
Issuance of common stock 42,500
Payment of dividends (142,000)**
Net cash used by financing activities (140,500)

Net increase in cash 44,000

Beginning cash 119,000
Cash at end of year $163,000

**Beginning R/E Net income Dividends Ending R/E

$340,000 $176,000 Dividends $374,000
Dividends $142,000