Forten company, a merchandiser, recently completed its calendar-year 2018 operations. For the year 1) allsales are credit sales 2) all credits to accounts receivable reflect cash receipts from customers
[The following information applies to the questions displayed below.] Forten Company, a merchandiser, recently completed its calendar-year 2018 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, balance sheets, and additional information follow. FORTEN COMPANY Comparative Balance Sheets December 31, 2018 and 2017 2018 2017 Assets Cash $ 70,900 $ 87 , 500 Accounts receivable 86, 910 64, 625 Inventory 296, 656 265, 800 Prepaid expenses 1, 350 2, 175 Total current assets 455, 816 420, 100 Equipment 143,500 122,000 Accum. depreciation-Equipment (43, 625) (53, 000) Total assets $555 , 691 $489, 100 Liabilities and Equity Accounts payable $ 67, 141 $135, 675 Short-term notes payable 14,200 8, 800 Total current liabilities 81 , 341 144, 475 Long-term notes payable 58, 000 62, 750 Total liabilities 139, 341 207, 225 Equity Common stock, $5 par value 190, 750 171, 250 Paid-in capital in excess of par, common stock 58, 500 0 Retained earnings 167 , 100 110, 625 Total liabilities and equity $555 , 691 $489, 100FORTEN COMPANY Income Statement For Year Ended December 31, 2018 Sales $652 , 500 Cost of goods sold 299,000 Gross profit 353, 500 Operating expenses Depreciation expense $ 34, 750 Other expenses 146, 400 181, 150 Other gains (losses) Loss on sale of equipment (19, 125) Income before taxes 153, 225 Income taxes expense 43, 850 Net income $109, 375 dditional Information on Year 2018 Transactions The loss on the cash sale of equipment was $19,125 (details in b). Sold equipment costing $88,875, with accumulated depreciation of $44,125, for $25,625 c Purchased equipment costing $110,375 by paying $58,000 cash and signing a long-term n Borrowed $5,400 cash by signing a short-term note payable. Paid $57,125 cash to reduce the long-term notes payable. Issued 3,900 shares of common stock for $20 cash per share. Declared and paid cash dividends of $52,900.FORTE?! comm Income Statement For Emu.- Ended December 31, 2013 Sales $552,500 Cost of goods sold 299,000 Gross profit 353,500 Operating expenses Depreciation expense $ 34,?50 other expenses 146,400 151,151: other gains {losses} Loss on sale of equipment 19,125} Income before taxes 153,225 Income taxes expanse 43,350 Net income $109,315 Additional Information on Year 2013 Transactions 3. The loss on the cash sale of equipment was $19,125 [details in bi. b. c. d. e. f. Sold equipment costing $83,875, with accumulated depreciation of $44,125, for $25,625 cash. Purchased equipment costing $110,375 by paying $58,000 cash and signing a long-term note payable for the balance. Borrowed $5,400 cash by signing a short-term note payable. Paid $57,125 cash to reduce the long-term notes payable. Issued 3,900 shares ofcommon stock for $20 cash per share. Declared and paid cash dividends of $52,900. Required: 1. Prepare a oomplete statement of cash ows; report its operating activities using the indirect method. {Amounts to be dedl should be indicated with a minus sign.} Cash flows from operating activities 5 109.3?5 Adjustments to reconcile net income to net cash provided by operations: Income statement items not attesting cash Depreciation expense Accounts payable decrease Accounts payable increase Accounts receivable decrease Accounts receivable increase FORTEN COMPANY Statement of Cash Flows For Year Ended December 31, 2018 Cash flows from operating activities Net income 109,375 Adjustments to reconcile net income to net cash provided by operations: Income statement items not affecting cash 34,750 Cash paid for dividends 19,125 Cash paid for equipment Cash paid on long-term note (22,285 Cash received from issuing stock (30,856 Cash received from sale of equipment 825 (68,534 Depreciation expense Salaries payable increase 4,750 Net cash provided by operating activities $ 47,150 Cash flows from investing activities Cash received from sale of equipment 19,125 Cash paid for equipment 58,000) Loss on disposal of equipment (19, 125 Net cash used in investing activities (96,250) Cash flows from financing activities: Cash paid for dividends (52,900) Cash received from issuing stock 3,900 Cash paid on long-term note (57, 125 Cash borrowed on short-term note 5,400 Cash received from sale of equipment (19,125)
