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 61,900 $ 81,500 77,850 58,625 287,656 259,800 1,290 2,055 428,696 401,980 149,500 116,000 (40,625) (50,000) $ 537,571 $ 467,980 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 61, 141 $ 126,675 12,400 7,600 73,541 134,275 61,000 56,750 134,541 191,025 178,750 158,250 45,500 0 178,780 118,705 $ 537,571 $ 467,980 FORTEN COMPANY Income Statement For Year Ended December 31, 2017 $ 622,500 293,000 329,500 Sales Cost of goods sold Gross profit Operating expenses Depreciation expense Other expenses Other gains (losses) Loss on sale of equipment Income before taxes Income taxes expense Net income $ 28,750 140,400 169, 150 (13,125) 147,225 35,450 $ 111,775 Additional Information on Year 2017 Transactions a. The loss on the cash sale of equipment was $13,125 (details in b). b. Sold equipment costing $70,875, with accumulated depreciation of $38,125, for $19,625 cash. C. Purchased equipment costing $104,375 by paying $46,000 cash and signing a long-term note payable for the balance. d. Borrowed $4,800 cash by signing a short-term note payable. e. Paid $54,125 cash to reduce the long-term notes payable. f. Issued 3,300 shares of common stock for $20 cash per share. g. Declared and paid cash dividends of $51,700. 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 61,900 $ 81,500 77,850 58,625 287,656 259,800 1,290 2,055 428,696 401,980 149,500 116,000 (40,625) (50,000) $ 537,571 $ 467,980 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 61, 141 $ 126,675 12,400 7,600 73,541 134,275 61,000 56,750 134,541 191,025 178,750 158,250 45,500 0 178,780 118,705 $ 537,571 $ 467,980 FORTEN COMPANY Income Statement For Year Ended December 31, 2017 $ 622,500 293,000 329,500 Sales Cost of goods sold Gross profit Operating expenses Depreciation expense Other expenses Other gains (losses) Loss on sale of equipment Income before taxes Income taxes expense Net income $ 28,750 140,400 169, 150 (13,125) 147,225 35,450 $ 111,775 Additional Information on Year 2017 Transactions a. The loss on the cash sale of equipment was $13,125 (details in b). b. Sold equipment costing $70,875, with accumulated depreciation of $38,125, for $19,625 cash. C. Purchased equipment costing $104,375 by paying $46,000 cash and signing a long-term note payable for the balance. d. Borrowed $4,800 cash by signing a short-term note payable. e. Paid $54,125 cash to reduce the long-term notes payable. f. Issued 3,300 shares of common stock for $20 cash per share. g. Declared and paid cash dividends of $51,700
