Question
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
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 | $ | 52,900 | $ | 75,500 | |||
Accounts receivable | 68,810 | 52,625 | |||||
Inventory | 278,656 | 253,800 | |||||
Prepaid expenses | 1,270 | 1,995 | |||||
Total current assets | 401,636 | 383,920 | |||||
Equipment | 155,500 | 110,000 | |||||
Accum. depreciationEquipment | (37,625 | ) | (47,000 | ) | |||
Total assets | $ | 519,511 | $ | 446,920 | |||
Liabilities and Equity | |||||||
Accounts payable | $ | 55,141 | $ | 117,675 | |||
Short-term notes payable | 10,600 | 6,400 | |||||
Total current liabilities | 65,741 | 124,075 | |||||
Long-term notes payable | 64,000 | 50,750 | |||||
Total liabilities | 129,741 | 174,825 | |||||
Equity | |||||||
Common stock, $5 par value | 166,750 | 152,250 | |||||
Paid-in capital in excess of par, common stock | 39,500 | 0 | |||||
Retained earnings | 183,520 | 119,845 | |||||
Total liabilities and equity | $ | 519,511 | $ | 446,920 | |||
FORTEN COMPANY Income Statement For Year Ended December 31, 2017 | ||||||
Sales | $ | 592,500 | ||||
Cost of goods sold | 287,000 | |||||
Gross profit | 305,500 | |||||
Operating expenses | ||||||
Depreciation expense | $ | 22,750 | ||||
Other expenses | 134,400 | 157,150 | ||||
Other gains (losses) | ||||||
Loss on sale of equipment | (7,125 | ) | ||||
Income before taxes | 141,225 | |||||
Income taxes expense | 27,050 | |||||
Net income | $ | 114,175 | ||||
Additional Information on Year 2017 Transactions
The loss on the cash sale of equipment was $7,125 (details in b).
Sold equipment costing $52,875, with accumulated depreciation of $32,125, for $13,625 cash.
Purchased equipment costing $98,375 by paying $34,000 cash and signing a long-term note payable for the balance.
Borrowed $4,200 cash by signing a short-term note payable.
Paid $51,125 cash to reduce the long-term notes payable.
Issued 2,700 shares of common stock for $20 cash per share.
Declared and paid cash dividends of $50,500.
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.)
Part 2 of 3 Required: Prepare a complete statement of cash flows using a spreadsheet, report its operating activitues using the indirect method. (Enter all amounts as posltive values.) 10 points FORTEN COMPAN Spreadsheet for Statement of Cash Flows For Year Ended December 31, 2017 Analysis of Changes Debit eBook December 31, 2016 Credit December 31, 2017 Balance sheet-debit Cash Accounts receivable Inventory Prepaid expenses Equipment 75,500 52.625 253,800 1.995 110.000 493,920 2,900 Print References 52,900 Balance sheet-credit Accumulated depreciation-Equipment Accounts payable Short-term notes payable Long-term notes payable Common stock, S5 par value Paid-in capital in excess of par value, common stock Retained earnings 47.000 117,675 6.400 50,750 152,250 119,845 493,920 Statement of cash flowsStep by Step Solution
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