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. 2014 FORTEN COMPANY Comparative Balance Sheets December 31, 2015 and 2014 2015 Assets Cash $ 68,039 Accounts receivable 78,425 Inventory 260,656 Prepaid expenses 1,580 $ 71,500 60,625 231,800 2,075 ces Total current assets Equipment Accum. depreciation-Equipment 408,700 161,475 (52,750) 366,000 119,000 (59,000) Total assets $ 517,425 $426,000 Liabilities and Equity Accounts payable Short-term notes payable $ 58,175 9,800 $ 111,050 5,900 Total current liabilities Long-term notes payable 67,975 24,725 116,950 42,500 92,700 159,450 Total liabilities Equity Common stock, $5 par value Paid-in capital in excess of par, common stock Retained earnings 166.750 51,000 206,975 149,750 0 116,800 Total liabilities and equity $ 517,425 $426,000 FORTEN COMPANY Income Statement For Year Ended December 31, 2015 Sales $632,500 Cost of goods sold 305,000 327,500 Gross profit Operating expenses Depreciation expense Other expenses $19,900 129,600 149,500 Other gains (losses) Loss on sale of equipment (4,475) Income before taxes Income taxes expense 173,525 30,750 Net income $ 142,775 b Additional Information on Year 2015 Transactions a. The loss on the cash sale of equipment was $4,475 (details in b). Sold equipment costing $45,675, with accumulated depreciation of $26,150, for $15,050 cash. c. Purchased equipment costing $88,150 by paying $62,000 cash and signing a long- term note payable for the balance. d. Borrowed $3,900 cash by signing a short-term note payable. e. Paid $43,925 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 $52,600. 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.) 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, 2015 Cash flows from operating activities Net Income Adjustments to reconcile net income to net cash provided by operations: $ 0 Cash flows from investing activities 0 Cash flows from financing activities: 0 0 $ Net increase (decrease) in cash Cash balance at beginning of year Cash balance at end of year $ 0
