Check my Forten Company, a merchandiser, recently completed its calendar-year 2017 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. FORTEN COMPANY Comparative Balance Sheets December 31, 2017 and 2016 2017 2016 $ 63,489 79,360 289,156 1,300 433,216 148, see (41,125) $ 540,591 $ 82,580 59,625 260,880 2,075 4e5, eee 117,eee (50,5ee) $ 471,5ee 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 $ 62,141 12.ee 74,841 68,500 135,341 $ 128, 175 7,8ee 135,975 57.750 193,725 159, 250 180, 750 46.500 Help Save Paid-in capital in excess of par, common stock Retained earnings Total liabilities and equity 46,500 178,000 $540,591 118,525 $ 471,5ee $ 627,500 294,000 333,500 FORTEN COMPANY Income Statement For Year Ended December 31, 2017 Sales Cost of goods sold Gross profit Operating expenses Depreciation expense $ 29,750 Other expenses 141,400 Other gains (losses) Loss on sale of equipment Income before taxes Income taxes expense Net income 171,150 (14,125) 148, 225 36,850 $ 111,375 Additional Information on Year 2017 Transactions a. The loss on the cash sale of equipment was $14.125 (details in b). b. Sold equipment costing $73,875, with accumulated depreciation of $39,125, for $20,625 cash. c. Purchased equipment costing $105,375 by paying $48,000 cash and signing a long-term note payable for the balance. d. Borrowed $4.900 cash by signing a short-term note payable. e. Paid $54,625 cash to reduce the long-term notes payable. f. Issued 3,400 shares of common stock for $20 cash per share. g. Declared and paid cash dividends of $51,900. 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 For Year Ended December 31, 2017 Cash flows from operating activities Net income $ Anment and antinanma tanto de 111,375 Required: 1. Prepare a complete statement of cash flows; report its operating activities using the indirect method should be indicated with a minus sign.) FORTEN COMPANY Statement of Cash Flows For Year Ended December 31, 2017 Cash flows from operating activities Net income $ 111,375 Adjustments to reconcile net income to net cash provided by operations: Accounts receivable increase (19,735) Inventory increase (28,356) Prepaid expense decrease Accounts payable decrease Depreciation expense Loss on disposal of equipment Loss on disposal of equipment $ 63,284 Net cash provided by operating activities Cash flows from investing activities Cash received from sale of equipment Cash paid for equipment Net cash used in investing activities Cash flows from financing activities: Cash borrowed on short-term note Cash paid on long-term note Cash received from issuing stock Cash paid for dividends . $ 63,284 Net cash used in financing activities Net increase (decrease) in cash Cash balance at beginning of year Cash balance at end of year $ 63,284
