Golden Corp., a merchandiser, recently completed its 2015 operations. For the ye

Question

Golden Corp., a merchandiser, recently completed its 2015 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, 2015 and 2014 2015 2014 Assets Cash Accounts receivable Inventory $217,000 $ 153,000 91,000 77,000 627,000 539,000 Total current assets Equipment Accum. depreciation-Equipment 935.000 769.000 367.000 325,000 (179,000) (117,000) Total assets $1,123,000 $ 977,000 Liabilities and Equity Accounts payable Income taxes payable $ 93,000 $ 84,000 48,000 38,000 Total current liabilities Equity Common stock, $2 par value Paid-in capital in excess of par value, common stock Retained earnings 141,000 22,000 618,000 594,000 209,000 173,000 155,000 88,000 Total liabilities and equity $1,123,000 $977,000 GOLDEN CORPORATION Income Statement For Year Ended December 31, 2015 Sales Cost of goods sold $ 1,857,000 1,099,000 758,000 Gross profit Operating expenses $ 62,000 507,000 Depreciation expense Other expenses 569,000 Income before taxes Income taxes expense 189,000 25,000 Net income $ 164,000

Explanation / Answer

Golden Corporation

Statement of cash flows

For the year ended December 31, 2015

Income tax expense Account

Fitz Company

Statement of cash flows

For the year ended December 31, 2015

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I. Cash flows from operating activities Net income 164,000 Adjustments to reconcile net income to cash provided by operations: Provision for income tax 25,000 Depreciation expense 62,000 Increase in accounts receivables - 14,000 Increase in inventory - 88,000 Increase in accounts payables 9,000 Less: Income tax paid - 15,000 Net cash flows from operating activities 143,000 II. Cash flows from Investing Activities Purchase of equipment -42,000 Net cash used in Investing activities - 42,000 III. Cash flows from Financing activities Issue of common shares 60,000 Dividend paid - 97,000 Net cash flows from Financing activities - 37,000 Net increase in cash (I + II + III) 64,000 Begining cash balance 153,000 Ending cash balance 217,000

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