In: Accounting
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 | |||
Required: (1) 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.) |
|||||
(2) Required: |
DINGEL CORPORATION |
||
Cash flow Statement |
||
For the Year ended December 31,2017 |
||
Cash Flow from Operating Activities: |
||
Net Income |
$ 156,800.00 |
|
Add: Adjustments |
||
Depreciation Expense |
$ 54,000.00 |
|
Increase in Accounts Receivables |
$ 18,500.00 |
|
Increase in Inventory |
$ 81,500.00 |
|
Increase in Accounts payable |
$ 29,000.00 |
|
Increase in Income taxes payable |
$ 9,400.00 |
|
A. Cash Outflow from Operating Activities |
$ 149,200.00 |
|
cash flow from investing activities |
||
Purchase of Equipment |
$58000 |
|
B.Net cash used by investing activities |
$ 58,000.00 |
|
Cash flows from Financing activities |
||
Payment od Dividend |
$ 102,000.00 |
|
Issue of Common Stock |
$ 66,500.00 |
|
C. Net cash Used in financing activities |
$ 35,500.00 |
|
(A+B+C) Net increase (Decrease) in cash and Cash Equivalent |
$ 55,700.00 |
|
Add: Beginning cash Balance |
$ 121,300.00 |
|
Ending Cash Balance |
$ 177,000.00 |
Working Note 1)) Purchase of Equipment |
|
Gross opening balance of equipment |
$ 312,000.00 |
Less: Closing balance of equipment |
$ 370,000.00 |
Equipment Purchased |
$ 58,000.00 |
Working Note 2)) Issue of Common stock includes both par value and additional capital received.
Working note 3)) Dividend amount paid during year |
|
Opening balance of retained earnings |
$ 69,700.00 |
Add: Profit during year |
$ 156,800.00 |
Less: Closing balance of Retained earnings |
$ 124,500.00 |
Dividends paid |
$ 102,000.00 |