Problem 12-7AA Indirect: Cash flows spreadsheet LO P1, P2, P3, P4 Use the follow
ID: 2590880 • Letter: P
Question
Problem 12-7AA Indirect: Cash flows spreadsheet LO P1, P2, P3, P4
Use the following information for the Problems below.
[The following information applies to the questions displayed below.]
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 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.
Additional Information on Year 2017 Transactions
Net income was $153,600.
Accounts receivable increased.
Inventory increased.
Accounts payable increased.
Income taxes payable increased.
Depreciation expense was $54,000.
Purchased equipment for $54,600 cash.
Issued 13,100 shares at $5 cash per share.
Declared and paid $100,000 of cash dividends.
Required:
Prepare a complete statement of cash flows using a spreadsheet; report operating activities under the indirect method. (Enter all amounts as positive values.)
Comparative Balance Sheets
December 31, 2017 and 2016 2017 2016 Assets Cash $ 175,000 $ 119,100 Accounts receivable 99,500 82,000 Inventory 617,500 537,000 Total current assets 892,000 738,100 Equipment 364,600 310,000 Accum. depreciation—Equipment (163,500 ) (109,500 ) Total assets $ 1,093,100 $ 938,600 Liabilities and Equity Accounts payable $ 109,000 $ 82,000 Income taxes payable 39,000 30,600 Total current liabilities 148,000 112,600 Equity Common stock, $2 par value 614,000 579,000 Paid-in capital in excess of par value, common stock 207,000 176,500 Retained earnings 124,100 70,500 Total liabilities and equity $ 1,093,100 $ 938,600 EN RATION Spreadsheet for Statement of Cash Flows For Year Ended December 31, 2017 Analysis of Changes December 31 December 31, 2016 Debit Credit Balance sheet-debit balance accounts 119,100 82,000 537,000 310,000 1,048,100 Cash 175,000 Accounts receivable Equipment 175,000 Balance sheet-credit balance accounts Accounts payable Income taxes payable Common stock, $2 par value Paid-in capital in excess of par value, common stock Retained eanings 109,500 82,000 30,600 579,000 176,500 70,500 1,048,100 Statement of cash flows Operating activities Investing activities Financing activities
Explanation / Answer
Pharoah Corporation Statement of cash flows For the Year Ended December 31, 2017 Analysis of Change Particulars Debit ($) Credit ($) Cash flow from operating activities Net Income 53,600 Adjustment for non cash , non operating expenses and incomes and working capital changes Depreciation expense 54,000 Increase in Accounts payable 27,000 Increase in income taxes payable 8,400 Increase in Accounts receivable 17,500 Increase in inventory 80,500 Net cash provided by operating activities (A) 1,45,000 Cash flow from investing activities Purchase of equipment 54,600 Net cash used in investing activities (B) 54,600 Cash flow from financing activities Issue of shares (13,100 X 5) 65,500 Dividend paid 1,00,000 Net cash used in investing activities (C) 34,500 Net increase or decrease in cash (A+B+C) 55,900 Add: Cash on 1 January 2017 (Opening cash balance) 1,19,100 Cash on 31 December 2017 (Closing cash balance) 1,75,000 Note: All the amounts that increases cash is shown in debit colunm and the amounts that decreases cash is shown in credit colunm. So, debit shows inflow of cash (positive amounts) and credit shows outflow of cash (negative amounts).