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Forten Company's current year income statement. comparative balance sheets, and additional information follow. For the year, {1} all sales are credit sales. (2} all credits to Accounts Receivable reect cash receipts from customers, {3] all purchases of inventory are on credit, {4] all debits to Accounts Payable reect cash payments for inventory, and (5} Other Expenses are paid in advance and are initially debited to Prepaid Expenses. FORTE\" COMPANY Comparative Balance Sheets December 31 Currant Year Prior Year Jae-ts Cash 5 54,400 $ T6,500 Accounts receivable ?0,310 53,625 Inventory 230,156 254,300 Prepaid expenses 1,200 2,005 Total current assets 406,146 336,930 Equipment 154,500 111,000 hccum. depreciationEquipment [38,125] {47,500} Total assets $522,521 $450,430 Liabilities and Equity Accounts payable $ 56,141 $119,125 Short-term notes payable 10,900 6,600 Total current liabilities 6T,041 125,??5 Long-term notes payable 63,500 51,?50 Total liabilities 130,541 l?7,525 Equity Common stock, $5 par value 16?,250 153,250 Paid-in capital in excess of par, common stock 42,000 0 Retained earnings 132,230 119,655 Total liabilities and equity $522,521 $450,430 PORTER COMPANY Income Statement For Current Year Ended December 31 Sales $597,500 Cost of goods sold 238,000 Gross profit 309,500 Operating expenses Depreciation expense $ 23,150 Other expenses 135,400 159,150 other gains (losses) Loss on sale of equipment g8,125} Income before taxes 142,225 Income taxes expense 23,450 Net income $113,?T5 Additional Information on Current Year Transactions 3. The loss on the cash sale of equipment was $8,125 [details in b}. b. Sold equipment costing $55,815. with accumulated depreciation of $33,125. for $14,525 cash. c. Purchased equipment costing $99,335 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 $51,525 cash to reduce the long-term notes payable. f. Issued 2,800 shares of common stock for $20 cash per share. 9. Declared and paid cash dividends of $50,700. 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 Net income $ 113,775 Adjustments to reconcile net income to net cash provided by operations: $ 113,775 Cash flows from investing activities 0 Cash flows from financing activities:Cash flows from investing activities 0 Cash flows from financing activities: 0 Net increase (decrease) in cash 113,775 Cash balance at December 31, prior year Cash balance at December 31, current year 113,775
