A B D E F G H 1 20 points 2 Prepare a complete statement of cash flows in good form for Forsythe Company; report its operating activities using the indirect 3 method. Forsythe Company, a merchandiser, recently completed its calendar year 2019 operations. 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) Other Expenses are paid in advance and are initially debited to Prepaid Expenses. The company's income statement and balance sheets follow. 4 5 6 7 8 9 Forsythe Company Income Statement For Year Ended December 31, 2019 Sales Cost of goods sold Gross Profit Operating Expenses Depreciation Expense Other Expenses Total Operating Expenses $583,500 288,000 295,500 10 11 12 13 14 $20,000 134,000 15 16 17 18 Other gains (losses) Income before taxes Income Taxes Expense Net income 154,000 141,500 -5.750 135,750 +3,250 S111,500 19 20 21 22 Forsythe company Financial Statements SCF B D 20 Net income $111,500 21 22 23 24 25 26 27 28 Forsythe Company Comparative Balance Sheets December 31, 2016, and December 31, 2019 2019 2018 Assets Cash $49,200 $74,000 Accounts receivable 65,820 52,000 Inventory 277,500 252,000 Prepaid expenses 1,500 1,800 Total current assets 394,020 379,800 Equipment 159,000 106,500 Accumulated depreciation, equipment -30625 -40000 Net Fixed Assets 128,375 66,500 Total assets $522,395 $446,300 29 30 31 32 33 34 un 3 6 37 8 39 40 41 Liabilities and Equity Accounts payable Short-term notes payable Total current liabilities Long-term notes payable Total Liabilities $54,145 $112,000 11,000 8,000 65,145 120,000 70,000 48,250 135,145 168,250 42 43 44 45 Equity Common stock. $5 par value SCF Financial Statements 162.750 150.000 A 38 Accounts payable $54,145 $112,000 19 Short-term notes payable 11,000 8,000 30 Total current liabilities 65,145 120,000 31 Long-term notes payable 70,000 48,250 32 Total Liabilities 135,145 168,250 13 14 Equity 45 Common stock, $5 par value 162,750 150,000 46 Paid-in capital in excess of par, common stock 38,250 0 47 Retained earnings 186,250 7,360 48 Total Equity 387,250 157,360 19 Total liabilities and equity $522,395 $325,610 50 51 52 Additional Information on Year 2019 Transactions 53 a. Sold equipment costing $46,875, with accumulated depreciation of $29,375, for $11,750 cash. This yielded a loss of $5,750. 54 b. Purchased equipment costing $99,375 by paying $35,000 cash and by signing a long-term note payable for the balance. Borrowed $3,000 cash by signing a short-term note payable. 56 d. Paid $42,625 cash to reduce the long-term notes payable. Issued 2,550 shares of common stock for $20 cash per share. 58 f. Declared and paid cash dividends of $53,300. 59 60 61 55 C 57 e. 62