Question

Use the following information for the Problems below. 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 16-6A Indirect: Statement of cash flows LO P1, P2, P3 Additional Information on Year 2017 Transactions Purchased equipment for $46,100 cash. Issued 12,600 shares of common stock for $5 cash per share. Declared and paid $95,000 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.)

Answer 1

Answer-

GOLDEN CORP.
STATEMENT OF CASH FLOWS (USING INDIRECT METHOD)
FOR THE YEAR ENDED 31 DECEMBER 2017
Particulars		Amount
		$
Cash flow from operating activities
Net Income		145600
Adjustments to reconcile net income to net cash provided by operating activities
Adjustment for non cash effects
Depreciation		54000
Change in operating assets & liabilities
Increase in accounts receivable	($92000-$77000)	-15000
Increase in inventory	($610000-$532000)	-78000
Increase in accounts payable	($99000-$77000)	22000
Increase in income taxes payable	($34000-$28100)	5900
Net cash flow from operating activities (a)		134500
Cash Flow from Investing activities
Purchase of equipment		-46100
Net cash Flow from Investing activities (b)		-46100
Cash Flow from Financing activities
Cash dividends paid		-95000
Common stock issued	12600 shares*$5 per share	63000
Net cash Flow from Financing activities (c)		-32000
Net Change in cash c=a+b+c		56400
Beginning cash balance		113600
Closing cash balance		170000