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 companys income statement and balance sheets follow.

FORTEN COMPANY Comparative Balance Sheets December 31, 2017 and 2016

2017

2016

Assets

Cash

$

79,900

$

93,500

Accounts receivable

95,970

70,625

Inventory

305,656

271,800

Prepaid expenses

1,410

2,295

Total current assets

482,936

438,220

Equipment

137,500

128,000

Accum. depreciationEquipment

(46,625

)

(56,000

)

Total assets

$

573,811

$

510,220

Liabilities and Equity

Accounts payable

$

73,141

$

144,675

Short-term notes payable

16,000

10,000

Total current liabilities

89,141

154,675

Long-term notes payable

55,000

68,750

Total liabilities

144,141

223,425

Equity

Common stock, $5 par value

202,750

170,250

Paid-in capital in excess of par, common stock

57,500

0

Retained earnings

169,420

116,545

Total liabilities and equity

$

573,811

$

510,220

FORTEN COMPANY Income Statement For Year Ended December 31, 2017
Sales				$	682,500
Cost of goods sold					305,000
Gross profit					377,500
Operating expenses
Depreciation expense	$	40,750
Other expenses		152,400			193,150
Other gains (losses)
Loss on sale of equipment					(25,125	)
Income before taxes					159,225
Income taxes expense					52,250
Net income				$	106,975

Additional Information on Year 2017 Transactions

The loss on the cash sale of equipment was $25,125 (details in b).

Sold equipment costing $106,875, with accumulated depreciation of $50,125, for $31,625 cash.

Purchased equipment costing $116,375 by paying $70,000 cash and signing a long-term note payable for the balance.

Borrowed $6,000 cash by signing a short-term note payable.

Paid $60,125 cash to reduce the long-term notes payable.

Issued 4,500 shares of common stock for $20 cash per share.

Declared and paid cash dividends of $54,100.

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, 2017
Cash flows from operating activities
Adjustments to reconcile net income to net cash provided by operations:
Cash flows from investing activities
Cash flows from financing activities:
Net increase (decrease) in cash
Cash balance at beginning of year
Cash balance at end of year

Required: Prepare a complete statement of cash flows; report its operating activities according to the direct method. (Amounts to be deducted should be indicated with a minus sign.)

FORTEN COMPANY
Statement of Cash Flows
For Year Ended December 31, 2017
Cash flows from operating activities
Cash flows from investing activities
Cash flows from financing activities
Net increase (decrease) in cash
Cash balance at beginning of year
Cash balance at end of year