Preparation of accounts and Cash flow statement.

The following is a listing of the accounts of Sallys Struthers Co. at December 31, 2002.

Cash $20,000 Accounts Receivable 30,000 Inventory (8 Struthers @ $5,000 each) 40,000 Prepaid Insurance 1,000 Vehicles 100,000 Accumulated Depreciation-Vehicles 36,000 Equipment 300,000 Accumulated Depreciation-Equipment 150,000 Security Deposits 3,000 Accounts Payable 12,000 Taxes Payable 10,000 Wages Payable 5,000 Rent Payable 2,000 Common Stock (5,000 shares) 50,000 Retained Earnings 229,000

During 2003 the following transactions occurred: Jan 1, Paid all accounts payable for merchandise. Jan 1, Received all accounts receivable. Jan 1, Borrowed $120,000 from bank. Note is repayable $20,000 per year plus interest. The first payment is due on Dec 31, 2003. The interest rate is 10%. Feb 1, Bought 10 more Struthers at $6,000 each, 40% down and the rest payable in one year. Mar 1, Paid 2002 taxes payable. Apr 1, Paid $4,000 for utilities. May 1, Issued 2,000 shares of common stock for $20,000. June 1, Sold 6 Struthers for $20,000 each. Customers pay 70% down and the rest payable in one year. July 1, Purchased 4 Struthers at $7,000 each - same terms. Aug 1, Paid dividend of $2.00 per share. Sept 1, Sold 5 Struthers for $22,000 each - same terms. Nov 1, Purchased two year insurance policy for $3,000. Dec 1, Exchanged 5,000 shares of common stock for a piece of land worth $50,000. Dec 20, Received $20,000 from accounts receivable. Dec 31, Paid first payment on Note Payable-Bank.

During the year the company paid wages of $ 40,000 in cash. At the end of the year they owed wages of $2,000. During the year they paid 14 months rent at $2,000 per month. Tax rate is 30%. 2003 taxes are to be paid in 2004. The vehicles were all purchased on the same date and have a total salvage value of $10,000 and are expected to have a useful life of 5 years. All equipment is expected to last 20 years and have no salvage value. The company uses FIFO when accounting for inventory. At December 31, 2003 the stock was selling for $50 per share.

Required: a) Prepare Cash flow statement b) Journalize the transactions using