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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 $ 178,000 $ 122,400
Accounts receivable 104,000 85,000
Inventory 622,000 540,000
Total current assets 904,000 747,400
Equipment 372,700 313,000
Accum. depreciation—Equipment (165,000 ) (111,000 )
Total assets $ 1,111,700 $ 949,400
Liabilities and Equity
Accounts payable $ 115,000 $ 85,000
Income taxes payable 42,000 32,100
Total current liabilities 157,000 117,100
Equity
Common stock, $2 par value 608,800 582,000
Paid-in capital in excess of par value, common stock 221,200 181,000
Retained earnings 124,700 69,300
Total liabilities and equity $ 1,111,700 $ 949,400

  

GOLDEN CORPORATION
Income Statement
For Current Year Ended December 31
Sales $ 1,862,000
Cost of goods sold 1,100,000
Gross profit 762,000
Operating expenses
Depreciation expense $ 54,000
Other expenses 508,000 562,000
Income before taxes 200,000
Income taxes expense 41,600
Net income $ 158,400


Additional Information on Current Year Transactions

  1. Purchased equipment for $59,700 cash.
  2. Issued 13,400 shares of common stock for $5 cash per share.
  3. Declared and paid $103,000 in cash dividends.

Required:
Prepare a complete statement of cash flows using the indirect method for the current year and one using a SPREADSHEET. (This should be two seperate charts).

Solutions

Expert Solution

Solution

GOLDEN CORPORATION
Cash flow Statement  
For the Year ended December 31,Current year
Cash Flow from Operating Activities:
Net Income $     158,400.00
Adjustments to reconcile net income to net cash provided by operations
Income statement items not affecting cash
Depreciation Expense $        54,000.00
Changes in current assets and current liabilities
Increase in Accounts Receivables $     (19,000.00)
Increase in Inventory $     (82,000.00)
Increase in Accounts payable $        30,000.00
Increase in Income taxes payable $          9,900.00
A. Cash Outflow from Operating Activities $   151,300.00
cash flow from investing activities
Purchase of Equipment $     (59,700.00)
B.Net cash used by investing activities $   (59,700.00)
Cash flows from Financing activities
Payment of Dividend $   (103,000.00)
Issue of Common Stock $        67,000.00
C. Net cash Used in financing activities $   (36,000.00)
(A+B+C) Net increase (Decrease) in cash and Cash Equivalent $     55,600.00
Cash balance, December 31, prior year $   122,400.00
Cash balance, December 31, current year $   178,000.00

.General notes for cash flow
Cash is increased when Current liability increase or Current asset Decrease.
Cash is Decreased when Current liability Decrease or Current asset Increase.
Depreciation or loss on sale of any asset is a non cash expense hence it will be added to net income to get operating cash
Profit on sale of asset or investment is a non cash profit and hence will be deducted from operating income.


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