Golden Corp., a merchandiser, recently completed its 2017 operations. For the ye

Question

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

A. Purchased equipment for $63,100 cash.

B. Issued 13,600 shares of common stock for $5 cash per share.

C. Declared and paid $105,000 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 $ 180,000 $ 124,600 Accounts receivable 107,000 87,000 Inventory 625,000 542,000 Total current assets 912,000 753,600 Equipment 378,100 315,000 Accum. depreciation—Equipment (166,000 ) (112,000 ) Total assets $ 1,124,100 $ 956,600 Liabilities and Equity Accounts payable $ 119,000 $ 87,000 Income taxes payable 44,000 33,100 Total current liabilities 163,000 120,100 Equity Common stock, $2 par value 624,000 584,000 Paid-in capital in excess of par value, common stock 212,000 184,000 Retained earnings 125,100 68,500 Total liabilities and equity $ 1,124,100 $ 956,600

Explanation / Answer

GOLDEN CORPORATION Statement of Cash Flows For Year Ended December 31, 2017 Cash flows from operating activities Net Income $161,600 Adjustments to reconcile net income to net cash provided by operations: Accounts receivable increase -20,000 Inventory increase -83,000 Accounts payable increase 32,000 Income taxes payable increase 10,900 Depreciation expense 54,000 Net cash provided by operating activities $155,500 Cash flows from investing activities: Cash paid for equipment -63,100 Net cash used in investing activities -63100 Cash flows from financing activities: Cash received from stock issuance 68,000 Cash paid for cash dividends -105,000 Net cash used in financing activities -37000 Net increase (decrease) in cash 55400 Cash balance at beginning of year 124,600 Cash balance at end of year 180000

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