Question

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	$	176,000			$	120,200
Accounts receivable		101,000				83,000
Inventory		619,000				538,000
Total current assets		896,000				741,200
Equipment		367,300				311,000
Accum. depreciation—Equipment		(164,000	)			(110,000	)
Total assets	$	1,099,300			$	942,200
Liabilities and Equity
Accounts payable	$	111,000			$	83,000
Income taxes payable		40,000				31,100
Total current liabilities		151,000				114,100
Equity
Common stock, $2 par value		616,000				580,000
Paid-in capital in excess of par value, common stock		208,000				178,000
Retained earnings		124,300				70,100
Total liabilities and equity	$	1,099,300			$	942,200

  

GOLDEN CORPORATION Income Statement For Year Ended December 31, 2017
Sales				$	1,852,000
Cost of goods sold					1,098,000
Gross profit					754,000
Operating expenses
Depreciation expense	$	54,000
Other expenses		506,000			560,000
Income before taxes					194,000
Income taxes expense					38,800
Net income				$	155,200

Additional Information on Year 2017 Transactions

1. Purchased equipment for $56,300 cash.
2. Issued 13,200 shares of common stock for $5 cash per share.
3. Declared and paid $101,000 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

Answer is given below