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 $ 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, 725 169,250 200, 750 56,500 170,200 $570,791 116,725 $ 506, 700 $677,500 304,000 373,500 PORTEN COMPANY Income Statement For Year Ended December 31, 2017 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 2017 Transactions a. Net income was $107,375. b. Accounts receivable increased. c. Inventory increased. d. Prepaid expenses decreased. e. Accounts payable decreased. f. Depreciation expense was $39,750. g. Sold equipment costing $103,875, with accumulated depreciation of $49,125, for $30,625 cash. This yielded a loss of $24.125. h. Purchased equipment costing $115,375 by paying $68,000 cash and (i.) by signing a long-term note payable for the balance. i. Borrowed $5,900 cash by signing a short-term note payable. j. Paid $59,625 cash to reduce the long-term notes payable. k. Issued 4,400 shares of common stock for $20 cash per share. 1. Declared and paid cash dividends of $53,900. 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, 2017 Analysis of Changes December 31, 2016 Debit Credit December 31, 2017 78,400 Balance sheet-debit Cash Accounts receivable Inventory Prepaid expenses Equipment 92,500 69,625 270,800 2,275 127,000 562,200 $ 78,400 Balance sheet-credit Accumulated depreciation-Equipment Accounts payable Short-term notes payable Long-term notes payable Common stock, $5 par value Paid-in capital in excess of par value, common stock Retained earnings 55,500 143,175 9,800 67,750 169,250 116,725 562,200 Statement of cash flows Statement of cash flows Operating activities Loss on sale of equipment Depreciation expense Increase in accounts receivable Increase in inventory Decrease in prepaid expenses Increase in prepaid expenses Decrease in accounts payable Investing activities Payment to purchase equipment Receipt from sale of equipment Financing activities Payment of cash dividends Payment on long-term note Issued common stock for cash Non cash investing and financing activities Purchase of equipment financed by long-term note payable $ 0 $ 0
