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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

2015

2014

Assets

Cash

$

49,800

$

73,500

Accounts receivable

65,890

59,000

Inventory

277,500

251,000

Prepaid expenses

1,000

1,600

Total current assets

394,190

385,100

Equipment

158,000

107,500

Accum. depreciationEquipment

(36,500)

(46,000)

Total assets

$

515,690

$

446,600

Liabilities and Equity

Accounts payable

$

59,965

$

115,000

Short-term notes payable

11,000

6,000

Total current liabilities

70,965

121,000

Long-term notes payable

62,500

48,750

Total liabilities

133,465

169,750

Equity

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

Total liabilities and equity

$

515,690

$

446,600

FORTEN COMPANY Income Statement For Year Ended December 31, 2015

Sales

$

583,000

Cost of goods sold

285,000

Gross profit

298,000

Operating expenses

Depreciation expense

$

20,000

Other expenses

132,800

152,800

Other gains (losses)

Loss on sale of equipment

(5,375)

Income before taxes

139,825

Income taxes expense

24,250

Net income

$

115,575

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.

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.)

FORTEN COMPANY

Spreadsheet for Statement of Cash Flows

For Year Ended December 31, 2015

Analysis of Changes

December 31, 2014

Debit

Credit

December 31, 2015

Balance sheetdebit

Cash

$73,500

$49,800

Accounts receivable

59,000

Inventory

251,000

Prepaid expenses

1,600

Equipment

107,500

$492,600

Balance sheetcredit

Accumulated depreciationEquipment

$46,000

Accounts payable

115,000

Short-term notes payable

6,000

Long-term notes payable

48,750

Common stock, $5 par value

150,750

Paid-in capital in excess of par value, common stock

0

Retained earnings

126,100

$492,600

Statement of cash flows

Operating activities

Investing activities

Financing activities

Non cash investing and financing activities

Purchase of equipment financed by long-term note payable

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