Question

Golden Corp., a merchandiser, recently completed its 2017 operations. For the year, (1) all sales are credit sales. (2) all credits to Accounts Receivable reflect cash receipts from customers, (3) all purchases or in ventory 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. Problem 12-6A Indirecti Statement of cash flows P1 P2 P3 GOLDEN CORPORATION Comparative Balance Sheets December 31, 2017 and 2016 2017 2016 Assets $164.000 83,000 601.000 B48.000 335,000 (158.000 $1,025,000 5107.000 71.000 576.000 704.000 299.000 1104.000 $899.000 GOLDEN CORPORATION Income Statement For Year Ended December 31, 2017 Cash Accounts receivable Inventory Total current assets Equipment Accum cepreciation Equip Totales Liabilities and Equity Accounts payable Income tres payable Total current abilities Equity Coron stock, 52 par le Padin capital in excess of per common stock Retained earnings Totalcites and $ +792.000 87.000 28.000 115.000 $ 71.000 25.000 96.000 706.000 Cost of goods sold Gross profit Operating Depreciation dense Other expenses 592.000 5 $ 54.000 494.000 195 00 122.000 $1625.000 Income sepse 548.000 158.000 22.000 $136000 NO

Answer 1

Solution

GOLDEN CORPORATION
Cash flow Statement
Fot the Year ended december 31,2017
Cash Flow from Operating Activities:
Net Income		$ 136,000
Adjustments to reconcile net income to net cash provided by operations
Income statement items not affecting cash
Depreciation Expense	$ 54,000
Chabges in current assets and current liabilities
Increase in Accounts Receivables	-$ 12,000
Increase in Inventory	-$ 75,000
Increase in Accounts payable	$ 16,000
Increase in Income taxe spayable	$ 3,000
		-$ 14,000
A. Cash Outflow from Operating Activities		$ 122,000
cash flow from investing activities
Purchase of Equipment	-$ 36,000
B.Net cash used by investing activities		-$ 36,000
Cash flows from Financing activities
Payment of Dividend	-$ 89,000
Issue of Common Stock	$ 60,000
C. Net cash Used in financing activities		-$ 29,000
(A+B+C) Net increase (Decrease) in cash and Cash Equivalent		$ 57,000
Add: Beginning cash Balance		$ 107,000
Ending Cash Balance		$ 164,000

.General notes for cash flow
Cash is increased when Current liability increase or Current asset Decrease.
Cash is Decreased when Current liability Decrease or Current asset Increase.
Depreciation or loss on sale of any asset is a non cash expense hence it will be added to net income to get operating cash
Profit on sale of asset or investment is a non cash profit and hence will be deducted from operating income.