CF 0

CF 1

Stmt Format

Income Taxes

Indirect Method

Solution 0

Does NI=CF?



Cash Flow Zero

Analyze the transactions shown below by placing the debits and credits in the T-accounts (skip the journal entries); then prepare an income statement for the year 19X0, retained earnings statement, balance sheet and cash flow statement.

Here's an easy way to prepare a cash flow statement: look at all the changes that happened in the Cash account and categorize each debit and credit in terms of whether it was an operating transaction, investing transaction, or financing transaction. Here is a format to follow for this cash flow statement.

1. Johnson Corporation issues 100,000 shares of $1 par common stock and receives $100,000 cash. (Debit Cash and credit Common Stock). The Common Stock account is in owner's equity, but since it's a corporation, we call it Stockholders' Equity.

2. Johnson Company purchases computer equipment for $36,000 cash. (The computer is estimated to last for 3 years with no salvage value.)

3. Johnson Company provides $300,000 of services to its clients and receives $300,000 cash.

4. Johnson Company incurs $200,000 of operating expenses and pays these expenses in cash.

5. Adjustment: Johnson Company records depreciation on the computer for the year, $12000.

6. After computing the net income before taxes, calculate the income tax expense, which is paid in cash. See Corporation Tax Schedule.







Acc Payable


Common Stock


Ret Earnings



Notes Pay


Oper Exp


Service Rev


Accts Rec



Depr Exp





Acc Depr


Inc Tax Exp