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 Assets 2017 2016Cash $183,000 $127,900Accounts receivable 111,500 90,000Inventory 629,500 545,000Total current assets 924,000 762,900Equipment 386,200 318,000Accum. Depreciation-Equipment (167,500) (113,500)Total assets $1,142,700 $967,400Liabilities and Equity Accounts Payable $125,000 $90,000Income taxes payable 47,000 34,600Total current liabilities 172,000 124,600Equity Common stock, $2 par value 630,000 587,000Paid-in capital in excess of par value, common stock 215,000 188,500Retained earnings 125,700 67,300Total liabilities and equity $1,142,700 $967,400GOLDEN CORPORATION Income Statement For Year Ended December 31, 2017 Sales $1,887,000Cost of goods sold 1,105,000Gross profit 782,000Operating expenses Depreciation expense $54,000 Other expenses 513,000 567,000Income before taxes 215,000Income taxes expense 48,600Net income $166,400Additional information on Year 2017 Transactionsa. Purchased equipment for $68,200 cash.b. Issued 13,900 shares of common stock for $5 cash per share.c. Declared and paid $108,000 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.

Answer 1

Answer:

Please see the solution below:

Explanation:

GOLDEN CORPORATION      

Statement of Cash Flow      

As of December 31, 2017      

     

CASHFLOWS FROM OPERATING ACTIVITIES      $

Net Income      166,400

Adjustments to reconcile net income to      

net cash provided by operating activities:      

Depreciation on Fixed Assets      54,000

(Increase) Decrease in Current Assets:      

Accounts Receivables      (21,500)

Inventory      (84,500)

Increase (Decrease) in Current Assets:      

Accounts Payable      35,000  

Income Tax Payable      12,400  

NET CASH PROVIDED BY OPERATING ACTIVITIES   161,800      

CASH FLOWS FROM INVESTING ACTIVITIES      

Purchase of Equipment      (68,200)

NET CASH USED IN INVESTING ACTIVITIES     (68,200)

     

CASH FLOWS FROM FINANCING ACTIVITIES      

Payment of Cash Dividends      (108,000)

Issuance of Common Stock      69,500  

NET CASH PROVIDED (USED) IN FINANCING ACTIVITIES  (38,500)

NET INCREASE (DECREASE) IN CASH     55,100  

Cash Balance, December 31 2016      127,900  

Cash Balance, December 31 2017      183,000