FORTEN COMPANY Income Statement For Year Ended December 31, 2017

Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $582,500 Cost of goods sold . . . . . . . . . . . . . . . .... . . . . . 285,000 Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . 297,500 Operating expenses Depreciation expense . . . . . . .. . .. $ 20,750 Other expenses . . . . . . . . . . . . . . 132,400 153,150 Other gains (losses) Loss on sale of equipment . . . . . . . . . . ...... . 5,125 Income before taxes . . . . . . . . . . . . . . . . ... . . 139,225 Income taxes expense . . . . . . . . . . . . . . . ... . 24,250 Net income . . . . . . . . . . . . . . . . . . . . . . . .. . $114,975

Comparative Balance Sheets December 31, 2017 and 2016

2017 2016 Assets Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 49,800 $ 73,500 Accounts receivable . . . . . . . . . . . . . . . . . . . . . ...65,810 50,625 Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . ... 275,656 251,800 Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . 1,250 1,875 Total current assets . . . . . . . . . . . . . . . . . . . . . . 392,516 377,800 Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . 157,500 108,000 Accum. depreciationEquipment . . . . . . . .... . . 36,625 46,000 Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . $513,391 $439,800 Liabilities and Equity Accounts payable . . . . . . . . . . . . . . . . . . . . . . .$ 53,141 $114,675 Short-term notes payable . . . . . . . . . . . . . . . . . 10,000 6,000 Total current liabilities . . . . . . . . . . . . . . . . . . . . .63,141 120,675 Long-term notes payable . . . . . . . . . . . . . . . . . 65,000 48,750 Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . .128,141 169,425 Equity Common stock, $5 par value . . . . . . . . . . . . . . .162,750 150,250 Paid-in capital in excess of par, common stock . . . . . . . . . . . . . . . . . . . . . . . . . . 37,500 0 Retained earnings . . . . . . . . . . . . . . . . . . . . . . . .185,000 120,125 Total liabilities and equity . . . . . . . . . . . . . . . . . . .$513,391 $439,800

Refer to the information reported about Forten Company in Problem 16-3A.

Required

Prepare a complete statement of cash flows using a spreadsheet as in Exhibit 16A.1; report its operating activities using the indirect method. Identify the debits and credits in the Analysis of Changes columns with letters that correspond to the following list of transactions and events.

a. Net income was $114,975. b. Accounts receivable increased. c. Inventory increased. d. Prepaid expenses decreased. e. Accounts payable decreased. f. Depreciation expense was $20,750. g. Sold equipment costing $46,875, with accumulated depreciation of $30,125, for $11,625 cash. This yielded a loss of $5,125. h. Purchased equipment costing $96,375 by paying $30,000 cash and (i.) by signing a long-term notepayable for the balance. j. Borrowed $4,000 cash by signing a short-term note payable. k. Paid $50,125 cash to reduce the long-term notes payable. l. Issued 2,500 shares of common stock for $20 cash per share. m. Declared and paid cash dividends of $50,100.