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 $ 76,500 $54,400 70,310 280,156 Cash Accounts receivable Inventory 53,625 254,800 2,005 Prepaid expenses 1,280 406,146 154,500 Total current assets 386,930 111,000 (47,500) Equipment Accum. depreciation-Equipment (38,125) $450,430 $522,521 Total assets Liabilities and Equity Accounts payable Short-term notes payable $56,141 10,900 $119,175 6,600 Total current liabilities 67,041 63,500 130,541 125,775 51,750 Long-term notes payable Total liabilities 177,525 Equity Common stock, $5 par value Paid-in capital in excess of par, common stock Retained earnings 168,750 40,500 182,730 153,250 0 119,655 Total liabilities and equity $522,521 $450,430 FORTEN COMPANY Income Statement For Year Ended December 31, 2017 $597,500 288,000 Sales Cost of goods sold Gross prof it Operating expenses Depreciation expense 309,500 $ 23,750 135,400 Other expenses 159,150 Other gains (losses) Loss on sale of equipment (8,125) 142,225 28,450 Income before taxes Income taxes expense $113,775 Net income Problem 12-3A Indirect: Statement of cash flows LO A1, P1, P2, P3 Additional Information on Year 2017 Transactions was $8,125 (details in b) a. The loss on the cash sale of equipment b. Sold equipment costing $55,875, with accumulated depreciation of $33,125, for $14,625 cash c. Purchased equipment costing $99,375 by paying $36,000 cash and signing a long term note payable for the balance. d. Borrowed $4,300 cash by signing a short-term note payable. e. Paid $51,625 cash to reduce the long-term notes payable. f. Issued 2,800 shares of common stock for $20 cash per share. g. Declared and paid cash dividends of $50,700. 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 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 Balance sheet-debit Cash 76,500 54,400 Accounts receivable 53,625 254,800 Inventory Prepaid expenses 2,005 111,000 Equipment S 497,930 54,400 Balance sheet-credit $ Accumulated depreciation-Equipment 47,500 119,175 Accounts payable Short-term notes payable 6,600 Long-term notes payable 51,750 Common stock, $5 par value 153,250 Paid-in capital in excess of par value, common stock 0 Retained earnings 119,655 $ S 497,930 0 Statement of cash flows Operating activities Investing activities Financing activities Financing activities Non cash investing and financing activities Purchase of equipment financed by long-term note payable 0$ 0 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 O