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 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. FORTEN COMPANY Comparative Balance Sheets December 31 Current Year Prior Year $ 55,900 71,810 281,656 1,250 410,616 153,500 (38,625) $525,491 $ 77,500 54,625 255, 800 1,975 389,900 112,000 (48,000) $453,900 Assets Cash Accounts receivable Inventory Prepaid expenses Total current assets Equipment Accum. depreciation-Equipment Total assets Liabilities and Equity Accounts payable Short-term notes payable Total current liabilities Long-term notes payable Total liabilities Equity Common stock, $5 par value Paid-in capital in excess of par, common stock Retained earnings Total liabilities and equity $ 57,141 11,200 68, 341 63,000 131,341 $120,675 6,800 127,475 52,750 180, 225 168,750 43,500 181,900 $525,491 154, 250 0 119,425 $453,900 FORTEN COMPANY Income Statement For Current Year Ended December 31 Sales $602,500 Cost of goods sold 289,000 Gross profit 313,500 Operating expenses Depreciation expense $ 24,750 Other expenses 136, 400 161,150 Other gains (losses) Loss on sale of equipment (9, 125) Income before taxes 143, 225 Income taxes expense 29,850 Net income $113,375 Additional Information on Current Year Transactions a. The loss on the cash sale of equipment was $9,125 (details in b). b. Sold equipment costing $58,875, with accumulated depreciation of $34,125, for $15,625 cash. c. Purchased equipment costing $100,375 by paying $38,000 cash and signing a long-term note payable for the balance. d. Borrowed $4,400 cash by signing a short-term note payable. e. Paid $52,125 cash to reduce the long-term notes payable. f. Issued 2,900 shares of common stock for $20 cash per share. g. Declared and paid cash dividends of $50,900. Required: Prepare a complete statement of cash flows using a spreadsheet using the indirect method. (Enter all amounts as positive values.) FORTEN COMPANY Spreadsheet for Statement of Cash Flows For Current Year Ended December 31 Analysis of Changes December 31, Prior Debit Credit Year December 31, Current Year $ $ Balance sheet-debit Cash Accounts receivable Inventory Prepaid expenses Equipment 17,185 25,856 77,500 54,625 255,800 1,975 112,000 501,900 55,900 71,810 281,656 1,250 153,500 564,116 725 41,500X $ $ $ 48,000 $ 9,375X 38,625 63,534 Balance sheet-credit Accumulated depreciation- Equipment Accounts payable Short-term notes payable Long-term notes payable Common stock, $5 par value Paid-in capital in excess of par value, common stock Retained earnings 120,675 6,800 52,750 154,250 4,400 10,250x 14,500 57,141 11,200 63,000 168,750 0 43,500 43,500 113,375 119,425 501,900 232,800 615,016 $ $ 113,375 9,125 Statement of cash flows Operating activities Net income Loss on sale of equipment Increase in accounts receivable Increase in inventory Decrease in prepaid expenses Decrease in accounts payable Depreciation expense 17,185 25,856 725 63,534 24,750 Investing activities Payment to purchase equipment Receipt from sale of equipment ols 38,000 15,625 4,400 Financing activities Borrowed on short-term note Payment on long-term note Issued common stock for cash Payment of cash dividends 52,125 58,000 50,900 Non cash investing and financing activities
