FORTEN COMPANY Income Statement For Current Year Ended December 31 Sales Cost of goods sold Gross profit Operating expenses (excluding depreciation) $134,400 Depreciation expense 22,750 Other gains Closes) Loss on sale of equipment Income before taxes Income taxes expense Net income $592,500 287,000 305,500 157,150 (2.125) 141,225 27,050 $114,175 PORTEN COMPANY Comparative Balance Sheets December 31 Current Year Prior Year $ 52,900 68,810 278,656 1,270 401,636 155,500 (37.625) $519,511 $ 75,500 52,625 253,800 1,995 383,920 110,000 (42.000) $446,920 Assets Cash Accounts receivable Inventory Prepaid expenses Total current assets Equipment Accun. depreciation Equipment Total asset Liabilities and Equity Accounts payable Short-term notes payable Total current liabilities Long-term noten payable Total Ilabilities Equity Common stock, $5 par value Paid-in capital in excess of par, common stock Retained earnings Total Habilities and equity $ 55,141 10, 600 65,741 64.000 129,741 $117,675 6.400 124.075 50.750 174,825 265,750 40,500 103.520 $519,511 152,250 0 119.85 $446.920 152,250 Paid-in capital in excess of par, common stock Retained earnings Total liabilities and equity 165.750 40,500 183 520 $519,511 119,845 $446,920 Additional Information on Current Year Transactions a. The loss on the cash sale of equipment was $7,125 (details in b). b. Sold equipment costing $52,875, with accumulated depreciation of $32,125, for $13,625 cash. c. Purchased equipment costing $98,375 by paying $34.000 cash and signing a long-term note payable for the balance. d. Borrowed $4,200 cash by signing a short-term note payable. e. Paid $51,125 cash to reduce the long-term notes payable. f. Issued 2,700 shares of common stock for $20 cash per share. g. Declared and paid cash dividends of $50,500. Problem 12-3A (Algo) Indirect: Statement of cash flows LO A1, P2, P3 Required: 1. Prepare a complete statement of cash flows using the Indirect method for the current year (Amounts to be deducted should be indicated with a minus sign.) FORTEN COMPANY Statement of Cash Flows For Current Year Ended December 31 Cash flows from operating activities Statement of Cash Flows For Current Year Ended December 31 Cash flows from operating activities Net income 114,175 Adjustments to reconcile net income to net cash provided by operations: Income statement items not affecting cash Depreciation expense 22,750 Loss on disposal of equipment 7,125 Changes in current assets and current liabilities Increase in accounts receivable (16,185) Increase in inventory (24,856) Decrease in prepaid expenses 725 Decrease in accounts payable (62,534) $ 41,200 Cash flows from investing activities Cash received from sale of equipment Cash paid for equipment Cash flows from financing activities: 22,750 7,125 Income statement items not affecting cash Depreciation expense Loss on disposal of equipment Changes in current assets and current liabilities Increase in accounts receivable Increase in inventory Decrease in prepaid expenses Decrease in accounts payable (16,185) (24,856) 725 (62,534) $ $ 41,200 Cash flows from investing activities Cash received from sale of equipment Cash paid for equipment 0 Cash flows from financing activities: 0 41,200 $ Net increase (decrease) in cash Cash balance at December 31, prior year Cash balance at December 31, current year $ 41,200