Question
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
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 companys balance sheets and income statement follow.
| GOLDEN CORPORATION Comparative Balance Sheets December 31, 2015 and 2014 | ||||||
| 2015 | 2014 | |||||
| Assets | ||||||
| Cash | $ | 205,000 | $ | 141,000 | ||
| Accounts receivable | 96,000 | 73,000 | ||||
| Inventory | 619,000 | 535,000 | ||||
| Total current assets | 920,000 | 749,000 | ||||
| Equipment | 355,000 | 317,000 | ||||
| Accum. depreciationEquipment | (171,000 | ) | (113,000 | ) | ||
| Total assets | $ | 1,104,000 | $ | 953,000 | ||
| Liabilities and Equity | ||||||
| Accounts payable | $ | 96,000 | $ | 80,000 | ||
| Income taxes payable | 40,000 | 34,000 | ||||
| Total current liabilities | 136,000 | 114,000 | ||||
| Equity | ||||||
| Common stock, $2 par value | 612,000 | 586,000 | ||||
| Paid-in capital in excess of par value, common stock | 208,000 | 169,000 | ||||
| Retained earnings | 148,000 | 84,000 | ||||
| Total liabilities and equity | $ | 1,104,000 | $ | 953,000 | ||
| GOLDEN CORPORATION Income Statement For Year Ended December 31, 2015 | |||||
| Sales | $ | 1,837,000 | |||
| Cost of goods sold | 1,095,000 | ||||
| Gross profit | 742,000 | ||||
| Operating expenses | |||||
| Depreciation expense | $ | 58,000 | |||
| Other expenses | 503,000 | 561,000 | |||
| Income before taxes | 181,000 | ||||
| Income taxes expense | 24,000 | ||||
| Net income | $ | 157,000 | |||
| Additional Information on Year 2015 Transactions | ||
| a. | Purchased equipment for $38,000 cash. | |
| b. | Issued 13,000 shares of common stock for $5 cash per share. | |
| c. | Declared and paid $93,000 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 Corporation Statement of Cash Flows For Year Ended December 31, 2015 | |
| Cash flows from operating activities | ||
| Net Income | ? | |
| Adjustments to reconcile net income to net cash provided by operationgs: | ||
| ? | ? | |
| ? | ? | |
| ? | ? | |
| ? | ? | |
| ? | ? | |
| ? | ? | |
| ? | ? | |
| Cash flows from investing activites: | ||
| ? | ? | |
| ? | ? | |
| ? | ? | |
| Cash flows from financing activities: | ||
| ? | ? | |
| ? | ? | |
| ? | ? | |
| ? | ? | |
| Net increase (decrease) in cash | ? | |
| Cash balance at beginning of year | ? | |
| Cash balance at end of year | ? | |
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International Fraud Handbook
Authors: Joseph T. Wells
1st Edition
1118728505, 9781118728505
