Question

need help making a statemtent of cash flows.

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 Assets Account able $ 230 000 $ 168,000 101.000 82.000 637 000 Total current assets Euipment 315.000 Acoum depreciation Equipment $1.161 000 $1,007,000 Liabilities and Equity Accounts payable Income taxes payable $ 100 000 $ 89000 Total Qurb es 155.000 112.000 Common stock. 52 par value Paid in capital in excess of par value, common stock Retained earnings 214.000 154000 178.000 93,000 Total abilities and equity $1.161.000 $1,007,000 GOLDEN CORPORATION Income Statement For Year Ended December 31, 2015 Sales Cost of goods sold S 1200 TT.000 Gross profit Operating expenses Depreciation expense Other expenses $57.000 512.000 income before taxes Income taxes expense Net income Additional Information on Year 2015 Transactions a. Purchased equipment for $47,000 cash. b. Issued 12,000 shares of common stock for $5 cash per share. c. Declared and paid $102,000 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.)

Answer 1

A Cash flow statement provides the following information:
1) Information about company's cash receipt and cash payment during an accounting period.
2) Information about company's operating, investing and financing activities.
3) Information access the company's liquidity, solvency and financing flexibility.
Under the indirect method, net income is converted operating cash flow by making adjustments for the transaction that effect net income but are non cash transactions. The adjustment includes eliminating non cash expenses, non operating items and the changes in the balance sheet account on account of accrual accounting events.
> Cash flow from operating activities (CFO), consists of the inflows and outflows of cash resulting from revenue and expense transactions that affect a firm's net income.
> Cash flow from investing activities (CFI) consists of the inflow and outflows of cash resulting from the acquisition of long term assets and investment.
> Cash Flow from financing activities (CFF) consists of the inflow and outflows of cash resulting from transactions affecting a firm's capital structure.

Amount $1,73,000 Golden Corporation Statement of Cash Flows For year ended December 31, 2015 Particulars Amount Cash Flow from Operating Activity Net Income Adjustment reconcile net income net cash flow from operating activities Add: Depreciation Expense $67,000 Increase in Accounts Receivable ($19,000) Increase in inventory ($93,000) Increase in accounts payable $14,000 Increase in Salaries and wages payable $9,000 Changes in Working Capital Net Cash Flow from Operating Activity Cash Flow from (used for) Investing Activity Purchase of Equipment ($47,000) Net Cash Flow used in Investing Activity Cash Flow from (used for) Financing Activity Repayment of Short Term loan payable Proceeds from issue of common stock $60,000 Dividend paid ($1,02,000) Net Cash Flow from Financing Activity Net Decrease in Cash and Cash Equivalents Add : Opening Cash Closing Cash ($22,000) $1,51,000 ($47,000) ($42,000) $62,000 $1,68,000 $2,30,000 Working Particulars 2015 2014 (A) Assets (B) Accounts Receivable $1,01,000 $82,000 inventory $6,37,000 $5,44,000 Accounts Payable $1,03,000 $89,000 Income Tax Paybale $52,000 $43,000 Increase in Current Assets is Cash Outflow and Decrease in Current Assets in Cash Inflow Increase in Current Liability is Cash Inflow and Decrease in Current Liability in Cash Outflow Increase /(Decrease) (A)-(B) $19,000 $93,000 $14,000 $9,000