Forten Company's current year income statement, comparative balance sheets, and additional information follow year, (1) all...

Transcribed Image Text:

Forten Company's current year income statement, comparative balance sheets, and additional information follow year, (1) all sales are credit sales, (2) all credits to Accounts Receivable reflect cash receipts from customers, (3) a purchases of inventory are on credit, and (4) all debits to Accounts Payable reflect cash payments for inventory. Sales Cost of goods sold Gross profit FORTEN COMPANY Income Statement For Current Year Ended December 31 Operating expenses (excluding depreciation) $ 145,400 Depreciation expense Other gains (losses) Loss on sale of equipment Income before taxes Income taxes expense Net income $ 647,500 298,000 349,500 33,750 179,150 (18,125) 152,225 42,450 $ 109,775 FORTEN COMPANY Comparative Balance Sheets December 31 Current Year Prior Year $ 69,400 $ 86,500 Assets Cash Accounts receivable Inventory Prepaid expenses Total current assets Equipment Accumulated depreciation-Equipment Total assets Liabilities and Equity Accounts payable 85,400 295,156 63,625 264,800 1,340 2,155 451,296 417,080 144,500 (43,125) $ 552,671 121,000 (52,500) $ 485,580 $ 66,141 $ 134,175 Long-term notes payable 72,400 70,350 Total liabilities 138,541 204,525 Equity Common stock, $5 par value 182,250 163,250 Paid-in capital in excess of par, common stock 57,000 0 Retained earnings 174,880 117,805 a. The loss on the cash sale of equipment was $18,125 (details in b). b. Sold equipment costing $85,875, with accumulated depreciation of $43,125, for $24,625 cash. c. Purchased equipment costing $109,375 by paying $56,000 cash and signing a long-term notes payable for the balance. d. Paid $51,325 cash to reduce the long-term notes payable. e. Issued 3,800 shares of common stock for $20 cash per share. f. Declared and paid cash dividends of $52,700. Required: Prepare a complete statement of cash flows using the direct method. Note: Amounts to be deducted should be indicated with a minus sign. FORTEN COMPANY Statement of Cash Flows For Current Year Ended December 31 Cash flows from operating activities $ Cash flows from investing activities Cash flows from financing activities 0 0 Forten Company's current year income statement, comparative balance sheets, and additional information follow year, (1) all sales are credit sales, (2) all credits to Accounts Receivable reflect cash receipts from customers, (3) a purchases of inventory are on credit, and (4) all debits to Accounts Payable reflect cash payments for inventory. Sales Cost of goods sold Gross profit FORTEN COMPANY Income Statement For Current Year Ended December 31 Operating expenses (excluding depreciation) $ 145,400 Depreciation expense Other gains (losses) Loss on sale of equipment Income before taxes Income taxes expense Net income $ 647,500 298,000 349,500 33,750 179,150 (18,125) 152,225 42,450 $ 109,775 FORTEN COMPANY Comparative Balance Sheets December 31 Current Year Prior Year $ 69,400 $ 86,500 Assets Cash Accounts receivable Inventory Prepaid expenses Total current assets Equipment Accumulated depreciation-Equipment Total assets Liabilities and Equity Accounts payable 85,400 295,156 63,625 264,800 1,340 2,155 451,296 417,080 144,500 (43,125) $ 552,671 121,000 (52,500) $ 485,580 $ 66,141 $ 134,175 Long-term notes payable 72,400 70,350 Total liabilities 138,541 204,525 Equity Common stock, $5 par value 182,250 163,250 Paid-in capital in excess of par, common stock 57,000 0 Retained earnings 174,880 117,805 a. The loss on the cash sale of equipment was $18,125 (details in b). b. Sold equipment costing $85,875, with accumulated depreciation of $43,125, for $24,625 cash. c. Purchased equipment costing $109,375 by paying $56,000 cash and signing a long-term notes payable for the balance. d. Paid $51,325 cash to reduce the long-term notes payable. e. Issued 3,800 shares of common stock for $20 cash per share. f. Declared and paid cash dividends of $52,700. Required: Prepare a complete statement of cash flows using the direct method. Note: Amounts to be deducted should be indicated with a minus sign. FORTEN COMPANY Statement of Cash Flows For Current Year Ended December 31 Cash flows from operating activities $ Cash flows from investing activities Cash flows from financing activities 0 0