Question

 

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		$	164,000					$	107,000
Accounts receivable			83,000						71,000
Inventory			601,000						526,000
Total current assets			848,000						704,000
Equipment			335,000						299,000
Accum. depreciation—Equipment			(158,000	)					(104,000	)
Total assets		$	1,025,000					$	899,000
Liabilities and Equity
Accounts payable		$	87,000					$	71,000
Income taxes payable			28,000						25,000
Total current liabilities			115,000						96,000
Equity
Common stock, $2 par value			592,000						568,000
Paid-in capital in excess of par value, common stock			196,000						160,000
Retained earnings			122,000						75,000
Total liabilities and equity		$	1,025,000					$	899,000

  

GOLDEN CORPORATION Income Statement For Current Year Ended December 31
Sales				$	1,792,000
Cost of goods sold					1,086,000
Gross profit					706,000
Operating expenses
Depreciation expense	$	54,000
Other expenses		494,000			548,000
Income before taxes					158,000
Income taxes expense					22,000
Net income				$	136,000

Additional Information on Current Year Transactions

1. Purchased equipment for $36,000 cash.
2. Issued 12,000 shares of common stock for $5 cash per share.
3. Declared and paid $89,000 in cash dividends.

Answer 1

GOLDEN CORPORATION
Statement of Cash Flows
For Year Ended December 31, 2013
Cash flows from operating activities
Net Income	136,000
Adjustments to reconcile net income to net cash provided by operations:
Accounts receivable increase	(12,000)
Inventory increase	(75,000)
Accounts payable increase	16,000
Income taxes payable increase	3,000
Depreciation expense	54,000
Net cash provided by operating activities		122,000
Cash flows from investing activities:
Cash paid for equipment	(36,000)
Net cash used in investing activities		(36,000)
Cash flows from financing activities:
Cash received from stock issuance	60,000
Cash paid for cash dividends	(89,000)
Net cash used in financing activities		(29,000)
Net increase (decrease) in cash	57,000
Cash balance at beginning of year	107,000
Cash balance at end of year	164,000