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Category > Accounting Posted 19 Aug 2017 My Price 12.00

Golding Company

Problem 15-47 Statement of Cash Flows, Indirect Method

The following balance sheets are taken from the records of Golding Company (numbers are expressed in thousands):

2013 2014

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 Golding’s ability to use cash to acquire Lemmons Company. Consider the information in Exhibit 15.2 (p. 679) and Cornerstone 15.6 (p. 684) as part of your analysis.

Assets Cash	$150,000	$185,000
Accounts receivable	70,000	80,000
Investments	—	30,000
Plant and equipment	100,000	105,000
Accumulated depreciation	(30,000)	(32,000)
Land	20,000	30,000
Total assets	$310,000	$398,000
Liabilities and equity Accounts payable	$ 40,000	$ 50,000
Bonds payable Mortgage payable Preferred stock	60,000 — 20,000	— 50,000 —
Common stock	100,000	160,000
Retained earnings	90,000	138,000
Total liabilities and equity	$310,000	$398,000

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Status NEW Posted 19 Aug 2017 03:08 PM My Price 12.00

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