Need Help Solving: Golden Corp., a merchandiser, recently completed its 2017 ope

Question

Need Help Solving:

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.

  

Additional Information on Year 2017 Transactions

Purchased equipment for $56,300 cash.

Issued 13,200 shares of common stock for $5 cash per share.

Declared and paid $101,000 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.)

GOLDEN CORPORATION
Comparative Balance Sheets
December 31, 2017 and 2016 2017 2016 Assets Cash $ 176,000 $ 120,200 Accounts receivable 101,000 83,000 Inventory 619,000 538,000 Total current assets 896,000 741,200 Equipment 367,300 311,000 Accum. depreciation—Equipment (164,000 ) (110,000 ) Total assets $ 1,099,300 $ 942,200 Liabilities and Equity Accounts payable $ 111,000 $ 83,000 Income taxes payable 40,000 31,100 Total current liabilities 151,000 114,100 Equity Common stock, $2 par value 616,000 580,000 Paid-in capital in excess of par value, common stock 208,000 178,000 Retained earnings 124,300 70,100 Total liabilities and equity $ 1,099,300 $ 942,200

Explanation / Answer

GOLDEN CORP. Statement of cash flows for the year ended December 31, 2017 (Indirect method) Cash flow from operating activities Net income 155200 Adjustment for items not affecting cash     Depreciation for the year   54000 Adjustment for changes in working capital     Increase in accounts receivable -18000     Increase in inventory -81000     Increase in accounts payable 28000     Increase in taxes payable 8900 -8100 Net cash flow from operating activities 147100 Cash flow from inesting activities     Purchase of equipment -56300 Net cash flow from investing activities -56300 Cash flow from financing activities    Issue of common stock 66000    Cash dividends paid -101000 Net cash flow from financing activities -35000 Net cash flow 55800 Cash balance as on January 1, 2017 120200 Cash balance as on December 31, 2017 176000

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