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.

    

  

  

Purchased equipment for $46,000 cash.

Issued 11,000 shares of common stock for $5 cash per share.

Declared and paid $101,000 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 CORPORATION
Comparative Balance Sheets
December 31, 2015 and 2014 2015 2014   Assets   Cash $ 221,000 $ 165,000   Accounts receivable 99,000 81,000   Inventory 635,000 543,000   Total current assets 955,000 789,000   Equipment 379,000 333,000   Accum. depreciation—Equipment (187,000 ) (121,000 )   Total assets $ 1,147,000 $ 1,001,000   Liabilities and Equity   Accounts payable $ 101,000 $ 88,000   Income taxes payable 50,000 42,000   Total current liabilities 151,000 130,000   Equity   Common stock, $2 par value 624,000 602,000   Paid-in capital in excess of par value, common stock 210,000 177,000   Retained earnings 162,000 92,000   Total liabilities and equity $ 1,147,000 $ 1,001,000

Explanation / Answer

GOLDEN CORPORATION Statement of Cash Flows For Year Ended December 31, 2015 Cash flows from operating activities Net Income 171000 Adjustments to reconcile net income to net cash provided by operations: cash provided by operating activities -18000 Increase in accounts receivable -92000 Increase in accounts payable 13000 Increase in taxes payable 8000 Depreciation expense 66000 Total -23000 Net cash provided by operating activities 148000 Cash flows from investing activities: Cash paid for equipment -46000 -46000 Cash flows from financing activities: Cash received from issuing stock 55000 Cash paid for cash dividends -101000 -46000 Net increase (decrease) in cash 56000 Cash balance at beginning of year 165000 Cash balance at end of year 221000

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