Question

please explain. thanks!

Required information Use the following information for the Problems below. [The following information applies to the questions displayed below.) Golden Corp.'s current year income statement, comparative balance sheets, and additional information follow. 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. Current Year Prior Year GOLDEN CORPORATION Comparative Balance Sheets December 31 De Assets Cash Accounts receivable Inventory Total current assets Equipment Accum. depreciation-Equipment Total assets Liabilities and Equity Accounts payable Income taxes payable Total current liabilities Equity Common stock, $2 par value Paid-in capital in excess of par value Retained earnings Total liabilities and equity $ 164,000 83,000 601,000 848,000 335,000 (158,000) $1,025,000 $ 107,000 71,000 526,000 704,000 299.000 (104,000) $ 899,000 87,000 28,000 115,000 $ 71,000 25,000 96,000 592,000 196,000 122,000 $1,025,800 568,000 160,000 75,000 $ 899,000

Answer 1

	Golden Corporation
	Cash Flow Statement
	For Current Year Ended December 31
(A)	Cash flow from Operating Activities
	Net Income	136,000
	Adjustments to reconcile net income to net cash provided by operations
	Depreciation expense	54,000
	Inventory increase	(75,000)
	Account payable increase	16,000
	Income taxes payable increase	3,000
	Account receivable increase	(12,000)
				122,000
(B)	Cash flow from Investing activities
	Purchase of equipment [As per additional info. (a)]	(36,000)
				(36,000)
(C)	Cash flow from financing activities
	Proceeds from issue of Common stock [As per additional info. (b)]	60,000
	Common share dividend [As per additional info. (c )]	(89,000)		(29,000)
	Net Increase/(decrease) in Cash (A+B+C)			57,000
	Cash balance at December 31, prior year			107,000
	Cash balance at December 31, Current year			164,000
	Golden Corporation
	Spreadsheet for Statement of Cash Flows
	For Current Year Ended December 31
			Analysis of Change
		December 31, Prior Year	Debit	Credit	December 31, Current year
	Balance sheet- debit balance accounts
	Cash	107,000	122,000	65,000	164,000
	Account receivable	71,000	1,792,000	1,780,000	83,000
	Inventory	526,000	1,161,000	1,086,000	601,000
	Equipment	299,000	36,000	-	335,000
		1,003,000			1,183,000
	Balance sheet- Credit balance accounts
	Accumulated Depreciation - Equipment	104,000	-	54,000	158,000
	Account payable	71,000	1,145,000	1,161,000	87,000
	Income Tax payable	25,000	19,000	22,000	28,000
	Common Stock, $2 per share	568,000	-	24,000	592,000
	Paid in capital in excess of par value, common stock	160,000	-	36,000	196,000
	Retained earnings	75,000	89,000	136,000	122,000
		1,003,000			1,183,000
	Statement of Cash flows
	Operating Activities
	Depreciation expense		54000
	Inventory increase			75,000
	Account payable increase		16,000
	Income taxes payable increase		3,000
	Account receivable increase			12,000
	Cash flow from Investing activities
	Purchase of equipment [As per additional info. (a)]			36,000
	Cash flow from financing activities
	Proceeds from issue of Common stock [As per additional info. (b)]		60,000
	Common share dividend [As per additional info. (c )]			89,000
			133000	212,000
	Cost of goods sold(COGS) = Opening stock + Purchase - Closing stock
	Hence, Purchase = COGS- Opening Stock+closing stock
	Purchase = 1,086,000-526,000+601,000
	Purchase =1,161,000