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D DAM 2 CHAPTERS 16-1 px Golden Corp, a merchandiser, recently completed its 201

ID: 2580804 • Letter: D

Question

D DAM 2 CHAPTERS 16-1 px 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 Assets Cash Accounts receivable $ 200,000 $ 147,000 87,000 75,000 623,000 537,000 Total current assets Equipment Accum, depreciation-Equipment Total assets 910,000 759,000 361,000 321,000 (175,000) (115,000) $1,096,000 $ 965,000 Liabilities and Equity Accounts payable Income taxes payable S 89,000 $ 82,000 44,00036,000 133,000 118,000 Total current liabilities Equity Common stock, $2 par value Paid-in capital in excess of par value, common stock Retained earnings 610,000 590,000 201,000 171.000 52,00086,000 Total liabilities and equity $1,096,000 $ 965,000 GOLDEN CORPORATION Income Statement For Year Ended December 31, 2015 $ 1.847000 Sales Cost of goods sold 1,097.000 750,000 60,000 565000 Gross profit Operating expenses Depreciation expense Other expenses 505,000565.000 85,000 Income before taxes Income taxes expense 24,000 Net income S 161.000 Additional Information on Year 2015 Transactions a. Purchased equipment for $40,000 cash b. Issued 10,000 shares of common stock for $5 cash per share c. Declared and paid $95,000 in cash dividends

Explanation / Answer

Details

Net

Cash Flow from Operating Activities

Net Profit before tax

185,000

Add: Non Cash and Non Operating Expenses

Depreciation

60,000

Operating profit before Working Capital changes

245,000

Add: Increase in Current Liabilities And decrease in Current Assets

Increase in Trade Payables

7,000

Less: Decrease in Current Liabilities And Increase in Current Assets

Increase in Trade Receivables

(12,000)

Increase in Inventories

(86,000)

Operating profit before income tax

154,000

Less: Income Tax Paid

(16,000)

Cash Flow from Operating Activities (A)

138,000

Cash Flow from Investing Activities

Purchase of Equipment

(40,000)

Cash Used in Investing Activities (B)

(40,000)

Cash Flow from Financing Activities

Issue of Shares(10,000 Shares@$2 each)

20,000

Increase-in-paid in capital in excess of par value

30,000

Dividend Paid

(95,000)

Cash Used in Financing Activities ( C )

(45,000)

Increase in Cash Flow (A+B+C)

53,000

Opening Cash

147,000

Closing Cash

200,000

Equipment A/c

Particulars

In $

Particulars

In $

To Bal. b/d

321,000

To Cash

40,000

By bal. c/d

361,000

Total

361,000

Total

361,000

Acc. Depreciation Equipment A/c

Particulars

In $

Particulars

In $

To Bal. b/d

115,000

By P&L (Current year)

60,000

By bal. c/d

175,000

Total

175,000

Total

175,000

Income Tax A/c

Particulars

In $

Particulars

In $

To Bal. b/d

36,000

To bank(Paid)

16,000

By P&L (Current Year)

24,000

By bal. c/d

44,000

Total

60,000

Total

60,000

Details

Net

Cash Flow from Operating Activities

Net Profit before tax

185,000

Add: Non Cash and Non Operating Expenses

Depreciation

60,000

Operating profit before Working Capital changes

245,000

Add: Increase in Current Liabilities And decrease in Current Assets

Increase in Trade Payables

7,000

Less: Decrease in Current Liabilities And Increase in Current Assets

Increase in Trade Receivables

(12,000)

Increase in Inventories

(86,000)

Operating profit before income tax

154,000

Less: Income Tax Paid

(16,000)

Cash Flow from Operating Activities (A)

138,000

Cash Flow from Investing Activities

Purchase of Equipment

(40,000)

Cash Used in Investing Activities (B)

(40,000)

Cash Flow from Financing Activities

Issue of Shares(10,000 Shares@$2 each)

20,000

Increase-in-paid in capital in excess of par value

30,000

Dividend Paid

(95,000)

Cash Used in Financing Activities ( C )

(45,000)

Increase in Cash Flow (A+B+C)

53,000

Opening Cash

147,000

Closing Cash

200,000