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 lly 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 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 $ 60,400 76,340 286, 156 1,280 424,176 150,500 (40,125) $ 534,551 $ 89,500 57,625 258,800 2,035 398,960 115,000 (49,500) $ 464,460 $ 60, 141 12,100 72,241 61,500 133, 741 $ 125, 175 7,400 132,575 55,750 188,325 176,750 157,250 157,250 Common stock, $5 par value Paid-in capital in excess of par, common stock Retained earnings Total liabilities and equity 176,750 44,500 179,560 $ 534,551 118,885 $ 464,460 $ 617,500 292,000 325,500 FORTEN COMPANY Income Statement For Year Ended December 31, 2017 Sales Cost of goods sold Gross profit Operating expenses Depreciation expense $ 27,750 Other expenses 139,400 Other gains (losses) Loss on sale of equipment Income before taxes Income taxes expense Net income 167,150 (12,125) 146,225 34,050 $ 112,175 Problem 12-3A Indirect: Statement of cash flows LO A1, P1, P2, P3 Additional Information on Year 2017 Transactions a. The loss on the cash sale of equipment was $12,125 (details in b). b. Sold equipment costing $67,875, with accumulated depreciation of $37,125, for $18,625 cash. c. Purchased equipment costing $103,375 by paying $44,000 cash and signing a long-term note payable for the balance. d. Borrowed $4,700 cash by signing a short-term note payable. e. Paid $53,625 cash to reduce the long-term notes payable. f. Issued 3,200 shares of common stock for $20 cash per share. g. Declared and paid cash dividends of $51,500. Required: 1. Prepare a complete statement of cash flows; report its operating activities using the indirect method (Amounts to be deduc should be indicated with a minus sign.) FORTEN COMPANY Statement of Cash Flows For Year Ended December 31, 2017 FORTEN COMPANY Statement of Cash Flows For Year Ended December 31, 2017 Cash flows from operating activities Net income 112,175 Adjustments to reconcile net income to net cash provided by operations: Depreciation expense HTTP ERROR HAAR Accounts payable increase Inventory increase Prepaid expense decrease Accounts payable decrease Loss on disposal of equipment 112,175 Net cash provided by operating activities Cash flows from investing activities Cash paid for equipment Cash received from sale of equipment Required information Cash flows from investing activities Cash paid for equipment Cash received from sale of equipment Net cash provided by 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 $ 112,175 Net increase (decrease) in cash Cash balance at beginning of year Cash balance at end of year $ 112,175
