Question

Selected financial statement information and additional data for Johnston Enterprises is presented below. Balance Sheet Data Cash Accounts Receivable Less: Allowance for Bad Debts Inventory Property, plant, and Equipment Less: Accumulated Depreciation Total Assets December 31, 2013 $119,000 320,000 (14,000) 340,000 1,122,000 (442,000) $1,445,000 December 31, 2014 $143,000 240,000 (12,000) 391,000 1,261,000 (476,000) $1,547.000 Accounts Payable (merchandise suppliers) Salaries Payable Income Taxes Payable Bank Loan Common Stock Retained Earnings Total Liabilities & Stockholders' Equity $102,000 68,000 77,000 391,000 467,000 340,000 $1,445,000 $187,000 51,000 85,000 350,000 510,000 364,000 $1,547,000 Income Statement Data for Calendar Year 2014 1,615,000 (781,000) 834,000 Sales Revenue Cost of Goods Sold Gross Profit Expenses: Depreciation Expense Salaries Expense Bad Debt Expense Interest Expense Loss on Sale of Equipment Income Before Taxes Income Tax Expense Net Income (153,000) (380,000) (11,000) (34,000) (12.000) 244,000 198,000) $146,000 Additional Information: During the calendar year 2014 Johnston purchased new equipment at a cost of $272,000.

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Answer 1

f) Net Cash $24,000 Increase in cash 2014 Cash flow from Operations $414,000 h) Cash from sale of PPE in 2014 $2,000 See T account working Working notes: T- Accounts $146,000 JOHNSTON ENTERPRISES Statement of Cash flows (Indirect method) For the Year Ended December 31, 2014 Cash flows from Operating Activities Net Profit Adjustments to reconcile net profit to net cash provided by Operating Activities Depreciation expense $153,000 Loss on sale of equipment $12,000 Change in operating current assets and liabilities Decrease in Accounts receivable $80,000 Decrease in allowance for bad debts -$2,000 Increase in Inventory -$51,000 Increase in Accounts payable $85,000 Decrease in Salaries payable -$17,000 Increase in income tax payable $8,000 Property, Plant and Equipment Opening balance $1,122,000 Accumulated Dep_$119,000 Bank $272,000 Bank $2,000 P & L Account $12,000 Closing balance $1,261,000 $1,394,000 $1,394,000 Accumulated Depreciation- PPE PPE $119,000 Opening balance Closing balance $476,000 Depreciation $595,000 $268,000 $414,000 $442,000 $153,000 $595,000 $2,000 $272,000 Cash dividend Closing balance Retained Earnings $122,000 Opening balance $364,000 Net Income $486,000 $270,000 $340,000 $146,000 $486,000 Net Cash from Operating Activities Cash flows from Investing Activities Sale of Equipment Purchase of Equipment Net Cash from Investing Activities Cash flows from Financing Activities Repayment of Bank loan Issue of common shares Cash dividend paid Net Cash from Financing Activities Net increase (decrease) in cash Cash balance at beginning of the year Cash balance at end of the year -$41,000 $43,000 $122,000 Debtors Closing balance Allowance for Bad debts $13,000 Opening balance $12,000 Bad debts $25,000 $14,000 $11,000 $25,000 -$120,000 $24,000 $119,000 $143,000