Question

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Golden Corp., a merchandiser, recently completed its 2017 operations. For the year, (1) all sales are credit sales, (2) all credits to Accounts Receivable reflect cash receipts from customers, (3) all purchases of inventory are on credit, (4) all debits to Accounts Payable reflect cash payments for inventory, (5) Other Expenses are all cash expenses, and (6) any change in Income Taxes Payable reflects the accrual and cash payment of taxes. The company’s balance sheets and income statement follow.

GOLDEN CORPORATION Comparative Balance Sheets December 31, 2017 and 2016
	2017				2016
Assets
Cash	$	175,000			$	119,100
Accounts receivable		99,500				82,000
Inventory		617,500				537,000
Total current assets		892,000				738,100
Equipment		364,600				310,000
Accum. depreciation—Equipment		(163,500	)			(109,500	)
Total assets	$	1,093,100			$	938,600
Liabilities and Equity
Accounts payable	$	109,000			$	82,000
Income taxes payable		39,000				30,600
Total current liabilities		148,000				112,600
Equity
Common stock, $2 par value		614,000				579,000
Paid-in capital in excess of par value, common stock		207,000				176,500
Retained earnings		124,100				70,500
Total liabilities and equity	$	1,093,100			$	938,600

  

GOLDEN CORPORATION
Income Statement
For Year Ended December 31, 2017

Sales

$

1,847,000

Cost of goods sold

1,097,000

Gross profit

750,000

Operating expenses

Depreciation expense

$

54,000

Other expenses

505,000

559,000

Income before taxes

191,000

Income taxes expense

37,400

Net income

$

153,600

Problem 12-6A Indirect: Statement of cash flows LO P1, P2, P3

Additional Information on Year 2017 Transactions

Purchased equipment for $54,600 cash.

Issued 13,100 shares of common stock for $5 cash per share.

Declared and paid $100,000 in cash dividends.

Required:
Prepare a complete statement of cash flows; report its cash inflows and cash outflows from operating activities according to the indirect method. (Amounts to be deducted should be indicated with a minus sign.)
  

GOLDEN CORPORATION
Statement of Cash Flows
For Year Ended December 31, 2017
Cash flows from operating activities
Adjustments to reconcile net income to net cash provided by operations:
		$0
Cash flows from investing activities:
		0
Cash flows from financing activities:
		0
Net increase (decrease) in cash		$0
Cash balance at beginning of year
Cash balance at end of year		$0

Answer 1

GOLDEN CORPORATION Statement of Cash Flows For Year Ended December 31, 2017 Cash flows from operating activities Net Income 153600 Adjustments to reconcile net income to net cash provided by operations: Depreciation expense 54000 Increase account receivable -17500 Increase inventory -80500 Increase account payable 27000 Increase income tax payable 8400 -8600 Net Cash flow from operating activities $145000 Cash flows from investing activities: Purchase equipment -54600 Net Cash flow from investing activities -54600 Cash flows from financing activities: Issue common stock 65500 Dividend paid -100000 Net Cash flow from financing actvities -34500 Net increase (decrease) in cash $55900 Cash balance at beginning of year 119100 Cash balance at end of year $175000