Required information [The following information applies to the questions displayed below.] Golden Corporation'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, and (5) any change in Income Taxes Payable reflects the accrual and cash payment of taxes. Assets Cash Accounts receivable Inventory Total current assets Equipment Accumulated depreciation-Equipment Total assets GOLDEN CORPORATION Comparative Balance Sheets December 31 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, common stock Retained earnings Total liabilities and equity GOLDEN CORPORATION Income Statement For Current Year Ended December 31 Sales Cost of goods sold Gross profit Operating expenses (excluding depreciation) Depreciation expense Income before taxes Income taxes expense Net income $ 1,847,000 1,097,000 750,000 505,000 54,000 191,000 37,400 $ 153,600 Additional Information on Current Year Transactions a. Purchased equipment for $54,600 cash. b. Issued 13,100 shares of common stock for $5 cash per share.. c. Declared and paid $100,000 in cash dividends. Current Year $ 175,000 99,500 617,500 892,000 364,600 (163,500) $ 1,093,100 $ 109,000 39,000 148,000 605,200 215,800 124,100 $ 1,093,100 Prior Year $ 119,100 82,000 537,000 738,100 310,000 (109,500) $ 938,600 $ 82,000 30,600 112,600 579,000 176,500 70,500 $ 938,600
Reporting Cash Flows
Reporting of cash flows means a statement of cash flow which is a financial statement. A cash flow statement is prepared by gathering all the data regarding inflows and outflows of a company. The cash flow statement includes cash inflows and outflows from various activities such as operating, financing, and investment. Reporting this statement is important because it is the main financial statement of the company.
Balance Sheet
A balance sheet is an integral part of the set of financial statements of an organization that reports the assets, liabilities, equity (shareholding) capital, other short and long-term debts, along with other related items. A balance sheet is one of the most critical measures of the financial performance and position of the company, and as the name suggests, the statement must balance the assets against the liabilities and equity. The assets are what the company owns, and the liabilities represent what the company owes. Equity represents the amount invested in the business, either by the promoters of the company or by external shareholders. The total assets must match total liabilities plus equity.
Financial Statements
Financial statements are written records of an organization which provide a true and real picture of business activities. It shows the financial position and the operating performance of the company. It is prepared at the end of every financial cycle. It includes three main components that are balance sheet, income statement and cash flow statement.
Owner's Capital
Before we begin to understand what Owner’s capital is and what Equity financing is to an organization, it is important to understand some basic accounting terminologies. A double-entry bookkeeping system Normal account balances are those which are expected to have either a debit balance or a credit balance, depending on the nature of the account. An asset account will have a debit balance as normal balance because an asset is a debit account. Similarly, a liability account will have the normal balance as a credit balance because it is amount owed, representing a credit account. Equity is also said to have a credit balance as its normal balance. However, sometimes the normal balances may be reversed, often due to incorrect journal or posting entries or other accounting/ clerical errors.
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![Required information
[The following information applies to the questions displayed below.]
Golden Corporation'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, and (5) any
change in Income Taxes Payable reflects the accrual and cash payment of taxes.
Assets
Cash
Accounts receivable
Inventory
Total current assets
Equipment
Accumulated depreciation-Equipment
Total assets
Liabilities and Equity
Accounts payable
GOLDEN CORPORATION
Comparative Balance Sheets
December 31
Income taxes payable
Total current liabilities
Equity
Common stock, $2 par value
Paid-in capital in excess of par value, common stock
Retained earnings
Total liabilities and equity
GOLDEN CORPORATION
Income Statement
For Current Year Ended December 31
Sales
Cost of goods sold
Gross profit
Operating expenses (excluding depreciation)
Depreciation expense
Income before taxes
Income taxes expense
Net income
$ 1,847,000
1,097,000
750,000
505,000
54,000
191,000
37,400
$ 153,600
Additional Information on Current Year Transactions
a. Purchased equipment for $54,600 cash.
b. Issued 13,100 shares of common stock for $5 cash per share..
c. Declared and paid $100,000 in cash dividends.
Current Year
$ 175,000
99,500
617,500
892,000
364,600
(163,500)
$ 1,093,100
$ 109,000
39,000
148,000
605,200
215,800
124,100
$ 1,093,100
Prior Year
$ 119,100
82,000
537,000
738,100
310,000
(109,500)
$ 938,600
$ 82,000
30,600
112,600
579,000
176,500
70,500
$ 938,600](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F83625f5d-9529-4491-96df-d29a574ffdc2%2F04e32144-9610-42e4-a574-552600d6943b%2Flgak83jh_processed.jpeg&w=3840&q=75)
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