Question

Golden Corp.'s current year income statement, comparative balance sheets, and additional information follow. 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.

GOLDEN CORPORATION Comparative Balance Sheets December 31
	Current Year						Prior Year
Assets
Cash		$	176,000					$	120,200
Accounts receivable			101,000						83,000
Inventory			619,000						538,000
Total current assets			896,000						741,200
Equipment			367,300						311,000
Accum. depreciation—Equipment			(164,000	)					(110,000	)
Total assets		$	1,099,300					$	942,200
Liabilities and Equity
Accounts payable		$	111,000					$	83,000
Income taxes payable			40,000						31,100
Total current liabilities			151,000						114,100
Equity
Common stock, $2 par value			606,400						580,000
Paid-in capital in excess of par value, common stock			217,600						178,000
Retained earnings			124,300						70,100
Total liabilities and equity		$	1,099,300					$	942,200

  

GOLDEN CORPORATION Income Statement For Current Year Ended December 31
Sales				$	1,852,000
Cost of goods sold					1,098,000
Gross profit					754,000
Operating expenses
Depreciation expense	$	54,000
Other expenses		506,000			560,000
Income before taxes					194,000
Income taxes expense					38,800
Net income				$	155,200

Additional Information on Current Year Transactions

1. Purchased equipment for $56,300 cash.
2. Issued 13,200 shares of common stock for $5 cash per share.
3. Declared and paid $101,000 in cash dividends.

Answer 1

Answer-

GOLDEN CORPORATION
STATEMENT OF CASH FLOWS (USING INDIRECT METHOD)
FOR THE YEAR ENDED 31
Particulars		Amount
		$
Cash flow from operating activities
Net Income		155200
Adjustments to reconcile net income to net cash provided by operating activities
Adjustment for non cash effects
Depreciation expenses		54000
Change in operating assets & liabilities
Increase in accounts receivable		-18000
Increase in inventory		-81000
Increase in accounts payable		28000
Increase in income taxes payable		8900
Net cash flow from operating activities (a)		147100
Cash Flow from Investing activities
New equipment purchased		-56300
Net cash Flow from Investing activities (b)		-56300
Cash Flow from Financing activities
Cash dividends paid		-101000
Common stock issued		66000
Net cash Flow from Financing activities (c)		-35000
Net Change in cash c=a+b+c		55800
Beginning cash balance		120200
Closing cash balance		176000