Question

Golden Corp., a merchandiser, recently completed its 2015 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, 2015 and 2014 2015 2014 Assets Cash $ 229,000 $ 159,000 Accounts receivable 95,000 79,000 Inventory 631,000 541,000 Total current assets 955,000 779,000 Equipment 373,000 329,000 Accum. depreciation—Equipment (183,000 ) (119,000 ) Total assets $ 1,145,000 $ 989,000 Liabilities and Equity Accounts payable $ 97,000 $ 86,000 Income taxes payable 46,000 40,000 Total current liabilities 143,000 126,000 Equity Common stock, $2 par value 626,000 598,000 Paid-in capital in excess of par value, common stock 217,000 175,000 Retained earnings 159,000 90,000 Total liabilities and equity $ 1,145,000 $ 989,000 GOLDEN CORPORATION Income Statement For Year Ended December 31, 2015 Sales $ 1,867,000 Cost of goods sold 1,101,000 Gross profit 766,000 Operating expenses Depreciation expense $ 64,000 Other expenses 509,000 573,000 Income before taxes 193,000 Income taxes expense 25,000 Net income $ 168,000 Additional Information on Year 2015 Transactions a. Purchased equipment for $44,000 cash. b. Issued 14,000 shares of common stock for $5 cash per share. c. Declared and paid $99,000 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

GOLDEN CORPORATION
Statement of Cash Flows
For Year Ended December 31, 2015
Cash flows from operating activities
Net Income	$168,000
Adjustments to reconcile net income to net cash provided by operations:
Accounts receivable increase 79000-95000	-16,000
Inventory increase 631,000- 541,000	-90,000
Accounts payable increase 97000-86000	11,000
Income taxes payable increase 46000-40000	6,000
Depreciation expense 183000-119000	64,000
Net cash provided by operating activities		143000
Cash flows from investing activities:
Cash paid for equipment	-44,000
Net cash used in investing activities		-44000
Cash flows from financing activities:
Cash received from stock issuance 14000*5	70,000
Cash paid for cash dividends	-99,000
Net cash used in financing activities		-29000
Net increase (decrease) in cash		70000
Cash balance at beginning of year		159,000
Cash balance at end of year		229000