Question
Forten Company, a merchandiser, recently completed its calendar-year 2015 operations. For the year, (1) all sales are credit sales, (2) all credits to Accounts Receivable
Forten Company, a merchandiser, recently completed its calendar-year 2015 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, 2015 and 2014 |
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| 2015 |
| 2014 |
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Assets |
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Cash | $ | 49,800 |
| $ | 73,500 |
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Accounts receivable |
| 65,890 |
|
| 59,000 |
|
Inventory |
| 277,500 |
|
| 251,000 |
|
Prepaid expenses |
| 1,000 |
|
| 1,600 |
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Total current assets |
| 394,190 |
|
| 385,100 |
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Equipment |
| 158,000 |
|
| 107,500 | |
Accum. depreciationEquipment |
| (36,500) |
|
| (46,000) | |
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Total assets | $ | 515,690 |
| $ | 446,600 | |
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Liabilities and Equity |
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Accounts payable | $ | 59,965 |
| $ | 115,000 | |
Short-term notes payable |
| 11,000 |
|
| 6,000 | |
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Total current liabilities |
| 70,965 |
|
| 121,000 |
|
Long-term notes payable |
| 62,500 |
|
| 48,750 | |
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Total liabilities |
| 133,465 |
|
| 169,750 |
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Equity |
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|
|
|
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Common stock, $5 par value |
| 162,750 |
|
| 150,750 | |
Paid-in capital in excess of par, common stock |
| 36,000 |
|
| 0 | |
Retained earnings |
| 183,475 |
|
| 126,100 | |
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Total liabilities and equity | $ | 515,690 |
| $ | 446,600 | |
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FORTEN COMPANY Income Statement For Year Ended December 31, 2015 | |||||
Sales |
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| $ | 583,000 |
Cost of goods sold |
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|
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| 285,000 |
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Gross profit |
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| 298,000 |
Operating expenses |
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Depreciation expense | $ | 20,000 |
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Other expenses |
| 132,800 |
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| 152,800 |
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Other gains (losses) |
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Loss on sale of equipment |
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| (5,375) |
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Income before taxes |
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|
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| 139,825 |
Income taxes expense |
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|
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| 24,250 |
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Net income |
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| $ | 115,575 |
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Additional Information on Year 2015 Transactions |
a. | Net income was $115,575. |
b. | Accounts receivable increased. |
c. | Inventory increased. |
d. | Prepaid expenses decreased. |
e. | Accounts payable decreased. |
f. | Depreciation expense was $20,000. |
g. | Sold equipment costing $46,500, with accumulated depreciation of $29,500, for $11,625 cash. This yielded a loss of $5,375. |
h. | Purchased equipment costing $97,000 by paying $30,000 cash and (i.) by signing a long-term note payable for the balance. |
j. | Borrowed $5,000 cash by signing a short-term note payable. |
k. | Paid $53,250 cash to reduce the long-term notes payable. |
l. | Issued 2,400 shares of common stock for $20 cash per share. |
m. | Declared and paid cash dividends of $58,200. |
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Required: |
Prepare a complete statement of cash flows using a spreadsheet; report its operating activities using the indirect method. (Enter all amounts as positive values.) |
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PLEASE DO NOT REPOST OTHER POST NEED EXACT ANSWERS FOR THIS QUESTION. Thank You.
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