Golden Corp. is a merchandiser that recently completed its 2013 operations. All sales were on credit, while credits to accounts receivable reflect cash received from customers. Purchases were also on credit, with debits to accounts payable reflecting cash paid for inventory. Other expenses were paid in cash. The document provides Golden Corp.'s balance sheet and income statement and requests a statement of cash flows using the indirect method, reporting cash flows from operating activities.
Golden Corp-- a merchandiser- recently completed its 2013 operations-.docx
1. Golden Corp., a merchandiser, recently completed its 2013 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 companys balance sheets and
income statement follow.
Purchased equipment for $36,000 cash.
Issued 11,000 shares of common stock for $5 cash per share.
Declared and paid $91,000 in cash dividends.
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 Corp., a merchandiser, recently completed its 2013 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 companys balance sheets and
income statement follow.
Solution
CASH FLOW FROM OPERATING ACTIVITIES:
Net Income $154000
Add: Increase in accounts receivable $21,000
Increase in Merchandise Inventory $82,000
2. Depreciation expense $56,000
Less: Increase in accounts payable $14,000
Increase in income tax payable $10,000
Net cash flow from operating activities $289,000
