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The following balance sheets are taken from the records of Golding Company (numbers are expressed in thousands): 20X1 20X2 Assets Cash $130,000 $150,000 Accounts receivable
The following balance sheets are taken from the records of Golding Company (numbers are expressed in thousands):
| 20X1 | 20X2 | |
| Assets | ||
| Cash | $130,000 | $150,000 |
| Accounts receivable | 25,000 | 20,000 |
| Plant and equipment | 50,000 | 60,000 |
| Accumulated depreciation | (20,000) | (25,000) |
| Land | 10,000 | 10,000 |
| Total assets | $195,000 | $215,000 |
| Liabilities and equity | ||
| Accounts payable | $ 10,000 | $ 5,000 |
| Bonds payable | 8,000 | 18,000 |
| Common stock | 120,000 | 120,000 |
| Retained earnings | 57,000 | 72,000 |
| Total liabilities and equity | $195,000 | $215,000 |
Additional information is as follows:
| A. | Equipment costing $10,000,000 was purchased at year-end. No equipment was sold; and |
| B. | Net income for the year was $25,000,000; $10,000,000 in dividends were paid. |
Required:
| 1. | Prepare a statement of cash flows using the indirect method. |
| 2. | Conceptual Connection: Assess Goldings ability to use cash to acquire Lemmons Company. Consider the information in Exhibit 14.2 (p. 795) and Example 14.6 (p. 800) as part of your analysis. |
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