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. GOLDEN CORPORATION Comparative Balance Sheets December 31
Current Year Prior Year
Assets
Cash $167,000 $110,300
Accounts receivable 87,500 74,000
Inventory 605,500 529,000
Total current assets 860,000 713,300
Equipment 343,000 302,000
Accum. depreciation—Equipment (159,500) (105,500)
Total assets $1,043,500 $909,800
Liabilities and Equity:
Accounts payable $93,000 $74,000
Income taxes payable 31,000 26,600
Total current liabilities 124,000 100,600
Equity:
Common stock, $2 par value 595,600 571,000
Paid-in capital in excess of par value, common stock 201,400 164,500
Retained earnings 122,500 73,700
Total liabilities and equity $1,043,500 $909,800

GOLDEN CORPORATION Income Statement For Current Year Ended December 31

Sales $1,807,000
Cost of goods sold 1,089,000
Gross profit 718,000
Operating expenses
Depreciation expense $54,000
Other expenses 497,000 551,000
Income before taxes 167,000
Income taxes expense 26,200
Net income $140,800

Additional Information on Current Year Transactions:

Purchased equipment for $41,000 cash.
Issued 12,300 shares of common stock for $5 cash per share.
Declared and paid $92,000 in cash dividends.

Required:
Prepare a complete statement of cash flows: report its cash inflows and cash outflows from operating activities according to the indirect method.

The cash flow for the company is analyzed below:

Net Income before taxes         $167,000

Add: non-cash expenses:

Depreciation                   $54,000

Adjustment of current assets:

Accounts receivable                    (13,500)

Inventory                                     (76,500)

Adjustment of current liabilities:

Accounts payable                        19,000

Income taxes payable                  (4,400)

Net Cash Flow from operations  $145,600

Financing Activities:

Common Stock                $61,500

Add: Dividend paid                    92,000

Net Cash Flow from financing activities   $153,500          

Investing Activities:

Equipment purchase       $41,000

Net Cash Flow from investing activities      $41,000

Net Cash Flow                                           $340,100

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Golden Corp.

Statement of Cash Flows for the year ended December 31, using the indirect method:

Net Income before taxes          $167,000

Add non-cash expenses:

Depreciation                                 54,000

Adjustment of current assets:

Accounts receivable                    (13,500)

Inventory                                     (76,500)

Adjustment of current liabilities:

Accounts payable                        19,000

Income taxes payable                  (4,400)

Net Cash Flow from operations                  $145,600

Financing Activities:

Common Stock                $61,500

Dividend paid                    92,000

Net Cash Flow from financing activities    $153,500          

Investing Activities:

Equipment purchase       $41,000

Net Cash Flow from investing activities      $41,000

Net Cash Flow                                            $340,100

Explanation:

The Golden Corp.'s statement of cash flows depicts the flow of cash under three main activity headings: operating, financing, and investing.  There are two methods under which Golden Corp. can prepare the statement.  They include the indirect method, which starts from the net income, adjusts the non-cash expenses and the changes in working capital, and the direct method, which shows the cash inflows and outflows for each cash flow item.