Activity 17 - Prepare a statement of cash flows - indirect method.

Presented below are the financial statements of Johnston Company.

JOHNSTON COMPANY
Comparative Balance Sheet
December 31

Assets
Cash
Accounts Receivable
Inventory
Equipment $70,000
Accumulated depreciation--equipment ($27,000)
Total

Liabilities and Stockholders' Equity

Accounts payable
Income taxes payable
Bonds payable
Common stock
Retained earnings
Total

JOHNSTON COMPANY
Income Statement
For the Year ended December 31, 2015

Sales revenue
Cost of goods sold
Gross profit
Operating expenses
Income from operations
Interest expense
Income before income taxes
Income tax expense
Net income

Additional data:
1. Dividends of $23,000 were declared and paid.
2. During the year equipment was sold for $10,000 cash. This equipment cost $15,000
originally and had a book value of $10,000 at the time of sale.
3. All depreciation expense, $8,000, is in the operating expenses.
4. All sales and purchases are on account.
5. Additional equipment was purchased for $7,000 cash.

Instructions
(a) Prepare a statement of cash flows using the indirect method.

NOTE: Enter a number in cells requesting a value; enter either a number or a formula in cells wi
PANY
e Sheet
1
2015 2014
$24,000 $33,000
$25,000 $14,000
41,000 25,000

78,000
43,000 (24,000) 54,000
133,000 126,000

$31,000 $43,000
24,000 20,000
20,000 10,000
25,000 25,000
33,000 28,000
$133,000 $126,000

$286,000
204,000
82,000
37,000
45,000
7,000
38,000
10,000
$28,000

ost $15,000

number or a formula in cells with a "?" .

Activity 13- Statement of Cashflows

JOHNSTON COMPANY
Statement of Cash Flows
For the Year Ended December 31, 2015
Cash flows from operating activities
Net income $28,000
Adjustments to reconcile net income to
net cash provided by operating activities
Depreciation expense $8,000
Increase in accounts receivable (11,000)
Increase in inventory (16,000)
Decrease in accounts payable (12,000)
Increase in income taxes payable 4,000 (27,000)
Net cash provided by operating activities 1,000

Cash flows from investing activities

Sale of equipment 10,000
Purchase of equipment -7,000
Net cash provided by investing activities 3,000

Cash flows from financing activities

Issuance of bonds 10,000
Payment of dividends -23,000
Net cash used by financing activities -13,000
Net decrease in cash -9,000
Cash at beginning of period 33,000
Cash at end of period $ 24,000