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	$	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		620,000				582,000
Paid-in capital in excess of par value, common stock		210,000				181,000
Retained earnings		124,700				69,300
Total liabilities and equity	$	1,111,700			$	949,400

  

GOLDEN CORPORATION Income Statement For Year Ended December 31, 2017
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 Year 2017 Transactions

Purchased equipment for $59,700 cash.

Issued 13,400 shares of common stock for $5 cash per share.

Declared and paid $103,000 in cash dividends.

Required:
Prepare a complete statement of cash flows; report its cash flows from operating activities according to the direct method. (Amounts to be deducted should be indicated with a minus sign.)
  

Answer 1