Golden Corp., a merchandiser, recently completed its 2015


Question Description:

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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
2015 2014
  Assets
  Cash $ 189,314 $ 127,260
  Accounts receivable 100,968 87,870
  Inventory 663,174 581,760
  Total current assets 953,456 796,890
  Equipment 362,566 324,210
  Accum. depreciation—Equipment (168,662) (111,100)
  Total assets $ 1,147,360 $ 1,010,000
  Liabilities and Equity
  Accounts payable $ 75,726 $ 105,040
  Income taxes payable 29,831 26,260
  Total current liabilities 105,557 131,300
  Equity
  Common stock, $2 par value 648,100 590,100
  Paid-in capital in excess of par value, common stock 263,750 176,750
  Retained earnings 129,953 111,850
  Total liabilities and equity $ 1,147,360 $ 1,010,000

 

GOLDEN CORPORATION
Income Statement
For Year Ended December 31, 2015
  Sales $ 2,100,000
  Cost of goods sold 861,000
  Gross profit 1,239,000
  Operating expenses
       Depreciation expense $ 57,562
       Other expenses 360,759 418,321
  Income before taxes 820,679
  Income taxes expense 160,032
  Net income $ 660,647

 

Additional Information on Year 2015 Transactions
a. Purchased equipment for $38,356 cash.
b. Issued 29,000 shares of common stock for $5.00 cash per share.
c. Declared and paid $642,544 in cash dividends.

 

Required:
Prepare a complete statement of cash flows; report its cash flows from operating activities according to the direct method. (Amounts to be deducted should be indicated with a minus sign.)

Answer

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