D DAM 2 CHAPTERS 16-1 px Golden Corp, a merchandiser, recently completed its 201
ID: 2580804 • Letter: D
Question
D DAM 2 CHAPTERS 16-1 px 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 Comparative Balance Sheets December 31, 2015 and 2014 Assets Cash Accounts receivable $ 200,000 $ 147,000 87,000 75,000 623,000 537,000 Total current assets Equipment Accum, depreciation-Equipment Total assets 910,000 759,000 361,000 321,000 (175,000) (115,000) $1,096,000 $ 965,000 Liabilities and Equity Accounts payable Income taxes payable S 89,000 $ 82,000 44,00036,000 133,000 118,000 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 $ 1.847000 Sales Cost of goods sold 1,097.000 750,000 60,000 565000 Gross profit Operating expenses Depreciation expense Other expenses 505,000565.000 85,000 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 dividendsExplanation / Answer
Details
Net
Cash Flow from Operating Activities
Net Profit before tax
185,000
Add: Non Cash and Non Operating Expenses
Depreciation
60,000
Operating profit before Working Capital changes
245,000
Add: Increase in Current Liabilities And decrease in Current Assets
Increase in Trade Payables
7,000
Less: Decrease in Current Liabilities And Increase in Current Assets
Increase in Trade Receivables
(12,000)
Increase in Inventories
(86,000)
Operating profit before income tax
154,000
Less: Income Tax Paid
(16,000)
Cash Flow from Operating Activities (A)
138,000
Cash Flow from Investing Activities
Purchase of Equipment
(40,000)
Cash Used in Investing Activities (B)
(40,000)
Cash Flow from Financing Activities
Issue of Shares(10,000 Shares@$2 each)
20,000
Increase-in-paid in capital in excess of par value
30,000
Dividend Paid
(95,000)
Cash Used in Financing Activities ( C )
(45,000)
Increase in Cash Flow (A+B+C)
53,000
Opening Cash
147,000
Closing Cash
200,000
Equipment A/c
Particulars
In $
Particulars
In $
To Bal. b/d
321,000
To Cash
40,000
By bal. c/d
361,000
Total
361,000
Total
361,000
Acc. Depreciation Equipment A/c
Particulars
In $
Particulars
In $
To Bal. b/d
115,000
By P&L (Current year)
60,000
By bal. c/d
175,000
Total
175,000
Total
175,000
Income Tax A/c
Particulars
In $
Particulars
In $
To Bal. b/d
36,000
To bank(Paid)
16,000
By P&L (Current Year)
24,000
By bal. c/d
44,000
Total
60,000
Total
60,000
Details
Net
Cash Flow from Operating Activities
Net Profit before tax
185,000
Add: Non Cash and Non Operating Expenses
Depreciation
60,000
Operating profit before Working Capital changes
245,000
Add: Increase in Current Liabilities And decrease in Current Assets
Increase in Trade Payables
7,000
Less: Decrease in Current Liabilities And Increase in Current Assets
Increase in Trade Receivables
(12,000)
Increase in Inventories
(86,000)
Operating profit before income tax
154,000
Less: Income Tax Paid
(16,000)
Cash Flow from Operating Activities (A)
138,000
Cash Flow from Investing Activities
Purchase of Equipment
(40,000)
Cash Used in Investing Activities (B)
(40,000)
Cash Flow from Financing Activities
Issue of Shares(10,000 Shares@$2 each)
20,000
Increase-in-paid in capital in excess of par value
30,000
Dividend Paid
(95,000)
Cash Used in Financing Activities ( C )
(45,000)
Increase in Cash Flow (A+B+C)
53,000
Opening Cash
147,000
Closing Cash
200,000
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