Question

In: Accounting

Golden Corp., a merchandiser, recently completed its 2017 operations. For the year, (1) all sales are...

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

Solutions

Expert Solution

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


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