Selected financial statement information and additional data for Johnston Enterprises is presented below. Be sure to read the additional information and the hints before proceeding. Prepare a statement of cash flows for the year ending December 31, 2014

Johnston Enterprises

Balance Sheet and Income Statement Data

December 31, December 31,

2014 2013___

Current Assets:

Cash $163,000 $119,000

Accounts Receivable 228,000 306,000

Inventory 391,000 340,000

Total Current Assets 782,000 765,000

Property, Plant, and Equipment 1,241,000 1,122,000

Less: Accumulated Depreciation (476,000) (442,000)

Total Assets $1,547,000 $1,445,000

Current Liabilities:

Accounts Payable $177,000 $102,000

Notes Payable 51,000 68,000

Income Tax Payable 85,000 76,500

Total Current Liabilities 313,000 246,500

Bonds Payable 350,000 391,000

Total Liabilities 663,000 637,500

Stockholders' Equity:

Common Stock 510,000 467,500

Retained Earnings 374,000 340,000

Total Stockholders' Equity 884,000 807,500

Total Liabilities & Stockholders' Equity $1,547,000 $1,445,000

Income Statement

Sales 1,615,000 $1,513,000

Less Cost of Goods Sold 731,000 731,000

Gross Profit 884,000 782,000

Expenses:

Selling & Administrative Expense 544,000 493,000

Interest Expense 34,000 34,000

Loss on Sale of Equipment 12,000 0

Income Before Taxes 294,000 255,000

Less Income Tax Expense 118,000 102,000

Net Income $176,000 $153,000

Additional Information:

During the year, Johnston sold equipment with an original cost of $153,000 and accumulated depreciation of $119,000 and purchased new equipment for $272,000.

Hints:

(1) Prepare the journal entry for the sale of the equipment to determine the amount of cash the transaction generated.

(2) Only those income statement items needed to adjust cash from operating activities are to be used in preparing the cash flow statement (loss on sale of equipment, net income.)

3) You will need to calculate Depreciation expense by tracking the change in the accumulated depreciation account taking into account that we have sold some equipment. Use of the T account might help.

(3) In order to determine if there were any dividends paid (financing activity) you must reconcile Retained Earnings from beginning balance to ending balance.