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 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 2014 Assets Cash Accounts receivable Inventory S 193,000 S 126,000 6,000 68,000 609,000 530,000 8 Total current assets Equipment Accum. depreciation-Equipment 888,000 724,000 340,000 307,000 (161,000) (108,000) Total assets $1,067,000 S 923,000 Liabilities and Equity Accounts payable Income taxes payable $ 86,000 $ 75,000 36,000 29,000 Total current liabilities Equity Common stock, $2 par value Paid-in capital in excess of par value, common stock Retained earnings 122,000 104,000 602,000 576,000 203.000 164,000 140,000 79,000 Total liabilities and equity $1,067,000 $ 923,000 GOLDEN CORPORATION Income Statement For Year Ended December 31, 2015 Sales Cost of goods sold $1,812,000 1,090,000 722,000 Gross profit Operating expenses 53,000 498,000 Depreciation expense Other expenses 551,000 Income before taxes Income taxes expense 171,000 22,000 Net income S 149,000 Additional Information on Year 2015 Transactions a. 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

Explanation / Answer

Golden Corporating Cash flow from operating activities Net income                                            149,000 Adjustments to reconcile Depreciaion expense                         53,000 Increase in accounts payable           11,000 increase in income taxes payable    7,000 increase in account receivable       -18,000 increase in inventory                         -79,000 Cash flow from operating activities 123,000 Cash flow from investing activities Purchase of Equipment                  -33,000 Cash flow from investing activities -33,000 Cash flow from financing activities cash from common stock               65,000 cash dividend                                    -88,000 cash used by financing activities                   -23,000 Net increase                                                            67,000 add Cash at the beginning                                 126,000 Cash balance at the end                                     193,000

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