CLOSING: CASH FLOW PROBLEM Make entries in the green sections of the ledger. When complete, construct a cash flow statement using guide below. Use a minus-sign to indicate cash outflows. CASH ACCOUNTS PAYABLE COMMON STOCK SERVICE REVENUE 46,000 EXPENSES DEPRECIATION EXP RETAINED EARNINGS 30,000 1,500 14,500 RETAINED EARNINGS NOTES PAYABLE EXPENSES SERVICE REVENUE ACCOUNTS RECEIVABLE DEPRECIATION EXPENSE GAIN ON DISPOSAL LAND POST to T-Accounts: 1. Johnson Corporation issued 100,000 shares of $1 par common stock and received cash of $100,000. 2. Johnson Corporation purchased equipment for $32,000, paying cash. 3. Johnson earned revenue of $46,000, one half in cash, the other half on account ACCUM. DEPR. EQUIP. 4. Johnson incurred expenses of $30,000, paying one-half in cash; the rest was on account. 5. Depreciation is $1,500 on the equipment. 6. CLOSING: see entries to the right to close revenues and expenses to Retained Earnings. See entries in RED above. 7. Johnson declared and paid a dividend of $3000 in cash to stockholders. Debit Retained Earnings, credit Cash. EQUIPMENT DEBIT CREDIT CASH FLOW STATEMENT-INDIRECT METHOD--use minus sign for negative cash flows. NET INCOME + DEPRECIATION EXPENSE -INCREASE IN ACCOUNTS RECEIVABLE +INCREASE IN ACCOUNTS PAYABLE -CASH FLOW FROM OPERATIONS CASH ACCOUNTS RECEIVABLE LAND EQUIPMENT ACCUM. DEPR EQUIP. ACCOUNTS PAYABLE NOTES PAYABLE COMMON STOCK RETAINED EARNINGS SERVICE REVENUE EXPENSES DEPRECIATION EXPENSE GAIN ON DISPOSAL TOTALS - PURCHASE OF EQUIPMENT = CASH FLOW FROM INVESTING +ISSUANCE OF COMMON STOCK -PAYMENT OF DIVIDEND CASH FLOW FROM FINANCING 0 0 NET CASH FLOW +BEGINNING BALANCE OF CASH =ENDING BALANCE OF CASH