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	$	177,000			$	121,300
Accounts receivable		102,500				84,000
Inventory		620,500				539,000
Total current assets		900,000				744,300
Equipment		370,000				312,000
Accum. depreciation—Equipment		(164,500	)			(110,500	)
Total assets	$	1,105,500			$	945,800
Liabilities and Equity
Accounts payable	$	113,000			$	84,000
Income taxes payable		41,000				31,600
Total current liabilities		154,000				115,600
Equity
Common stock, $2 par value		618,000				581,000
Paid-in capital in excess of par value, common stock		209,000				179,500
Retained earnings		124,500				69,700
Total liabilities and equity	$	1,105,500			$	945,800

  

GOLDEN CORPORATION Income Statement For Year Ended December 31, 2017
Sales				$	1,857,000
Cost of goods sold					1,099,000
Gross profit					758,000
Operating expenses
Depreciation expense	$	54,000
Other expenses		507,000			561,000
Income before taxes					197,000
Income taxes expense					40,200
Net income				$	156,800

Additional Information on Year 2017 Transactions

1. Net income was $156,800.
2. Accounts receivable increased.
3. Inventory increased.
4. Accounts payable increased.
5. Income taxes payable increased.
6. Depreciation expense was $54,000.
7. Purchased equipment for $58,000 cash.
8. Issued 13,300 shares at $5 cash per share.
9. Declared and paid $102,000 of cash dividends.

    
Required:
Prepare a complete statement of cash flows using a spreadsheet; report operating activities under the indirect method. (Enter all amounts as positive values.)
  

Answer 1

GOLDEN CORPORATION
Statement of Cash flows
For the Year Ended December 31, 2017
Cash flows from operating activities
Net income		$ 156,800
Adjustment to reconcile net income
Depreciation expense	$      54,000
Increase in accounts receivable	$   (18,500)
Increase in inventory	$   (81,500)
Increase in accounts payable	$      29,000
Increase in income tax payable	$        9,400
		$    (7,600)
Net cash provided by operating activities		$ 149,200
Cash flows from investing activities
Cash paid for purchase of plant assets	$   (58,000)
Net cash used by investing activities		$ (58,000)
Cash flows from financing activities
Cash paid for dividends	$ (102,000)
Cash received from issuance of common stock	$      66,500
Net cash used by financing activities		$ (35,500)
Net Increase in cash and cash equivalents		$    55,700
Cash and cash equivalents at beginning of period		$ 121,300
Cash and cash equivalents at end of period		$ 177,000