Golden Corp., a merchandiser, recently completed its 2015 operations. For the ye
ID: 2466532 • Letter: G
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.
Purchased equipment for $33,000 cash.
Issued 13,000 shares of common stock for $5 cash per share.
Declared and paid $88,000 in cash dividends.
Prepare a complete statement of cash flows; report its cash inflows and cash outflows from operating activities according to the indirect method. (Amounts to be deducted should be indicated with a minus sign.)
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.
Comparative Balance Sheets
December 31, 2015 and 2014 2015 2014 Assets Cash $ 193,000 $ 126,000 Accounts receivable 86,000 68,000 Inventory 609,000 530,000 Total current assets 888,000 724,000 Equipment 340,000 307,000 Accum. depreciation—Equipment (161,000 ) (108,000 ) Total assets $ 1,067,000 $ 923,000 Liabilities and Equity Accounts payable $ 86,000 $ 75,000 Income taxes payable 36,000 29,000 Total current liabilities 122,000 104,000 Equity Common stock, $2 par value 602,000 576,000 Paid-in capital in excess of par value, common stock 203,000 164,000 Retained earnings 140,000 79,000 Total liabilities and equity $ 1,067,000 $ 923,000
GOLDEN CORPORATION
Income Statement
For Year Ended December 31, 2015 Sales $ 1,812,000 Cost of goods sold 1,090,000 Gross profit 722,000 Operating expenses Depreciation expense $ 53,000 Other expenses 498,000 551,000 Income before taxes 171,000 Income taxes expense 22,000 Net income $ 149,000
Purchased equipment for $33,000 cash.
b.Issued 13,000 shares of common stock for $5 cash per share.
c.Declared and paid $88,000 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. (Amounts to be deducted should be indicated with a minus sign.)
Explanation / Answer
Indirect Cash flow Statement:
For Year Ended December 31, 2015 Amount $ Amount $ Cash flows from operating activities: Net Income 149000 Add: Depreciation 53000 Less: Increase in Accounts Receivable (18000) Less: increase in Inventory (79000) Add: Increase in accounts payable 11000 Add: increase in Income tax payable 7000 Net cash from the Operating Activities 123000 Cash flows from investing activities: Machinery purchase (33000) Cash flows from financing activities: Dividend (88000) Issue of common stock 65000 Net cash used by financing activities (23000) Net cash flow of all activities 67000 Opening balance of cash 126000 Closing balance of cash 193000Related Questions
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