2014 $33,000 $14,000 25,000 78,000 (24.000 54,000 125,000 $43,000 20,000 10,000 25,000 28.000 $126.000 P12-7B Prepare a statement of cash flows-indirect method, and compute free cash flow Presented below are the financial statements of Johnston Company JOHNSTON COMPANY Comparative Balance Sheet December 31 2015 Assets $24.000 Cash $25,000 Accounts Receivable 41.000 Inventory Equipment 570.000 Accumulated depreciation-equipment $27.000 43.000 Total 133.000 Liabilities and Stockholders' Equity Accounts payable $31.000 Income taxes payable 24.000 Bonds payable 20.000 Common stock 25,000 Retained earnings 33.000 Total $133.000 JOHNSTON COMPANY Income Statement For the Year ended December 31, 2015 Sales revenue $285.000 Cast of goods sold 204.000 Gross profit 82.000 Operating expenses 37.000 Income from operations 45,000 Interest expense 7.000 Income before income taxes 36.000 Income tax expense 10.000 Net income $28.000 Additional data: 1. Dividends of $23,000 were declared and paid. 2. During the year equipment was sold for $10,000 cash. This equipment cat $15,000 originally and had a book value of $10,000 at the time of sale. 3. All depreciation expense, 58,000, is in the operating expenses. 4. All sales and purchases are on account 5. Additional pment was purchased for 57.000 cash Instructions (a) Prepare a statement of cash flows using the indirect method. (b) Compute free cash flow. NOTE: Enter a number in cells requesting a value; enter either a number or a formula in cells with "?". (a) JOHNSTON COMPANY Statement of Cash Flows For the Year Ended December 31, 2019 Cash flows from operating activities Net income Value Adjustments to reconcile net income to net cash provided by operating activities Depreciation expense Value Increase in accounts receivable Value Increase in inventory Value Decrease in accounts payable Value Increase in income taxes payable Value Net cash provided by operating activities Cash flows from investing activities Sale of equipment Value Purchase of equipment Value Net cash provided by investing activities Valve Cash flows from financing activities Issuance of common stock Value Payment of dividends Value Net cash used by financing activities Net decrease in cash Cash at beginning of period Value Cash at end of period (b) Free Cash Flow: Net cash provided by operating activities Value Less: Capital expenditures Value Cash dividends Value Free cash flow Value