Question

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

Additional Information on Year 2017 Transactions

a. Purchased equipment for $54,600 cash.

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

c. 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
Cash Flows From Investing Activities:
Net Increase (decrease) in cash
Cash balance at beginning of year
Cash Balance at end of year

Answer 1