Chapter 12 Homework A Required information [The following information applies to the questions displayed below.] points Forten Company, a merchandiser, recently completed its calendar-year 2018 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, balance sheets, and additional information follow. eBook Print FORTEN COMPANY Comparative Balance Sheets December 31, 2018 and 2017 2018 2017 References $ 78,400 94,460 304,156 1,400 478,416 138,500 (46,125) $570,791 $ 92,500 69,625 270,800 2,275 435,200 127,000 (55,500) $ 506,700 Assets Cash Accounts receivable Inventory Prepaid expenses Total current assets Equipment Accum. depreciation-Equipment Total assets Liabilities and Equity Accounts payable Short-term notes payable Total current liabilities Long-term notes payable Total liabilities Equity Common stock, $5 par value Paid-in capital in excess of par, common stock Retained earnings Total liabilities and equity $ 72,141 15,700 87,841 55,500 143,341 $ 143, 175 9,800 152,975 67,750 220.725 178,750 200,750 66,000 160,700 $570,791 107,225 $ 506,700 $ 677,500 304,000 373,500 FORTEN COMPANY Income Statement For Year Ended December 31, 2018 Sales Cost of goods sold Gross profit Operating expenses Depreciation expense $ 39,750 Other expenses 151,400 Other gains (losses) Loss on sale of equipment Income before taxes Income taxes expense Net income 191,150 (24,125) 158,225 50,850 $ 107,375 Additional Information on Year 2018 Transactions a. The loss on the cash sale of equipment was $24,125 (details in b). b. Sold equipment costing $103,875, with accumulated depreciation of $49,125, for $30,625 cash. c. Purchased equipment costing $115,375 by paying $68,000 cash and signing a long-term note payable for the balance. d. Borrowed $5,900 cash by signing a short-term note payable. e. Paid $59,625 cash to reduce the long-term notes payable. f. Issued 4,400 shares of common stock for $20 cash per share. g. Declared and paid cash dividends of $53,900. Required: 1. Prepare a complete statement of cash flows, report its operating activities using the indirect method. (Amounts to be deducted should be indicated with a minus sign.) FORTEN COMPANY Statement of Cash Flows Enr Year Ended December 31 2018 Required: 1. Prepare a complete statement of cash flows, report its operating activities using the indirect method. (Amounts to be deducted should be indicated with a minus sign.) FORTEN COMPANY Statement of Cash Flows For Year Ended December 31, 2018 Cash flows from operating activities Adjustments to reconcile net income to net cash provided by operations: Income statement items not affecting cash Changes in current assets and current liabilities Cash flows from investing activities Cash flows from financing activities: Net increase (decrease) in cash Cash balance at December 31, 2017 Cash balance at December 31, 2018
