EXAM 2 CHAPTERS 16-1 pox Golden Corp, a merchandiser, recently completed its 201

Question

EXAM 2 CHAPTERS 16-1 pox 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 relects 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 75,000 623,000537,000 Total current assets Equipment 910,000 759,000 361,000 321,000 (175,000) (115,000) Total assets $1,096,000 $965,000 Liabilities and Equity Accounts payable Income taxes payable S 89,000 S 82,000 4,00036,000 133,000 118,000 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 $1.847.000 1,097,000 750,000 505,000565.000 185,000 Cost of goods sold Gross profit Operating expenses Depreciation expense S 60,000 Other expenses 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

Statement of Cash Flows AS ON DECEMBER 31 2015 Amount in $ Amount in $ Net income $          1,61,000 Cash flows from operating activities Adjustments for: Depreciation $             60,000 $             60,000 (Increase) / Decrease in Account receivables $            -12,000 Inventory Decrease / (Increase) $            -86,000 Income Tax Payable $                8,000 Accounts payable Increase / ( Decrese) $                7,000 $            -83,000 Net cash from operating activities $          1,38,000 Cash flows from investing activities Purchase of Equipment $            -40,000 Net cash used in investing activities $            -40,000 Cash flows from Financing activities Dividend Paid $            -95,000 Issue of Common Stock $             50,000 Net cash used in financing activities $            -45,000 Net increase in cash and cash equivalents $             53,000 Add :Cash and cash equivalents at beginning of period $          1,47,000 Cash and cash equivalents at end of period $          2,00,000

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