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In: Accounting

Golden Corp.'s current year income statement, comparative balance sheets, and additional information follow. For the year,...

Golden Corp.'s current year income statement, comparative balance sheets, and additional information follow. 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.

GOLDEN CORPORATION
Comparative Balance Sheets
December 31
Current Year Prior Year
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 607,600 581,000
Paid-in capital in excess of par value, common stock 219,400 179,500
Retained earnings 124,500 69,700
Total liabilities and equity $ 1,105,500 $ 945,800

  

GOLDEN CORPORATION
Income Statement
For Current Year Ended December 31
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 Current Year Transactions

  1. Purchased equipment for $58,000 cash.
  2. Issued 13,300 shares of common stock for $5 cash per share.
  3. Declared and paid $102,000 in cash dividends.
GOLDEN CORPORATION
Statement of Cash Flows
For Current Year Ended December 31
Cash flows from operating activities
Adjustments to reconcile net income to net cash provided by operations:
Cash flows from investing activities
Cash flows from financing activities:
Net increase (decrease) in cash
Cash balance at December 31, prior year
Cash balance at December 31, current year

Solutions

Expert Solution

Answer-

GOLDEN CORPORATION
STATEMENT OF CASH FLOWS (USING INDIRECT METHOD)
FOR THE YEAR ENDED 31
Particulars Amount
$
Cash flow from operating activities
Net Income 156800
Adjustments to reconcile net income to net cash provided by operating activities
Adjustment for non cash effects
Depreciation expenses 54000
Change in operating assets & liabilities
Increase in accounts receivable -18500
Increase in inventory -81500
Increase in accounts payable 29000
Increase in income taxes payable 9400
Net cash flow from operating activities (a) 149200
Cash Flow from Investing activities
New equipment purchased -58000
Net cash Flow from Investing activities (b) -58000
Cash Flow from Financing activities
Cash dividends paid -102000
Common stock issued 66500
Net cash Flow from Financing activities (c) -35500
Net Change in cash c=a+b+c 55700
Beginning cash balance 121300
Closing cash balance 177000

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