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	$	170,000			$	113,600
Accounts receivable		92,000				77,000
Inventory		610,000				532,000
Total current assets		872,000				722,600
Equipment		351,100				305,000
Accum. depreciation—Equipment		(161,000	)			(107,000	)
Total assets	$	1,062,100			$	920,600
Liabilities and Equity
Accounts payable	$	99,000			$	77,000
Income taxes payable		34,000				28,100
Total current liabilities		133,000				105,100
Equity
Common stock, $2 par value		604,000				574,000
Paid-in capital in excess of par value, common stock		202,000				169,000
Retained earnings		123,100				72,500
Total liabilities and equity	$	1,062,100			$	920,600

  

GOLDEN CORPORATION Income Statement For Year Ended December 31, 2017
Sales				$	1,822,000
Cost of goods sold					1,092,000
Gross profit					730,000
Operating expenses
Depreciation expense	$	54,000
Other expenses		500,000			554,000
Income before taxes					176,000
Income taxes expense					30,400
Net income				$	145,600

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

Additional Information on Year 2017 Transactions

1. Purchased equipment for $46,100 cash.
2. Issued 12,600 shares of common stock for $5 cash per share.
3. Declared and paid $95,000 in cash dividends.

Answer 1