Question

Required information

Use the following information for the Problems below.

[The following information applies to the questions displayed below.]

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.

Problem 12-6A Indirect: Statement of cash flows LO P2, P3

Required:
Prepare a complete statement of cash flows using the indirect method for the current year. (Amounts to be deducted should be indicated with a minus sign.)

Answer 1

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