Question

Golden Corp., a merchandiser, recently completed its 2017 operations. For the year, (1) all sales are...

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 $ 180,000 $ 124,600
Accounts receivable 107,000 87,000
Inventory 625,000 542,000
Total current assets 912,000 753,600
Equipment 378,100 315,000
Accum. depreciation—Equipment (166,000 ) (112,000 )
Total assets $ 1,124,100 $ 956,600
Liabilities and Equity
Accounts payable $ 119,000 $ 87,000
Income taxes payable 44,000 33,100
Total current liabilities 163,000 120,100
Equity
Common stock, $2 par value 624,000 584,000
Paid-in capital in excess of par value, common stock 212,000 184,000
Retained earnings 125,100 68,500
Total liabilities and equity $ 1,124,100 $ 956,600

  

GOLDEN CORPORATION
Income Statement
For Year Ended December 31, 2017
Sales $ 1,872,000
Cost of goods sold 1,102,000
Gross profit 770,000
Operating expenses
Depreciation expense $ 54,000
Other expenses 510,000 564,000
Income before taxes 206,000
Income taxes expense 44,400
Net income $ 161,600

Additional Information on Year 2017 Transactions

Purchased equipment for $63,100 cash.

Issued 13,600 shares of common stock for $5 cash per share.

Declared and paid $105,000 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.)

Homework Answers

Answer #1
Statement of cash flow
Cash from operating activities
net income for the year 161,600
Adjustments to reconcile net income to net cash provided by
operations
Depreciation expense 54,000
increase in account receivable -20,000
increase in inventory -83000
increase in accounts payable 32000
increase in income taxes payable 10,900
Net cash frok operating activities 155,500
Cash from investing activities
cash paid for purchase of Equipment -63,100
Net cash used for investing activities -63,100
Cash from financing activities
cash from stock issue 68,000
Cash paid for dividends -105,000
net cash used by financing activities -37,000
Net increase in cash 55,400
Cash at the beginning of the year 124,600
Cash at year end 180,000
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