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 $ 67,900 83,890 293,656 1,330 446,776 145,500 (42,625) $ 549,651 $ 85,500 62,625 263,800 2,135 414,060 120,000 (52,000) $ 482,860 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-ters 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 $ 65,141 13,689 78,741 59,000 137,741 $ 132,675 8,400 141, 075 60,750 201, 825 162,250 188,750 55,500 175,660 $ 549,651 117,985 $ 482,060 Check my $ 642,500 297,000 345,500 FORTEN COMPANY Income Statement For Current Year Ended December 31 Sales Cost of goods sold Gross profit Operating expenses Depreciation expense $ 32,750 Other expenses 144,400 Other gains (losses) Loss on sale of equipment Income before taxes Income taxes expense Net income 177,150 (17,125) 151,225 41,050 $ 110,175 Additional Information on Current Year Transactions a. The loss on the cash sale of equipment was $17,125 (details in b). b. Sold equipment costing $82,875, with accumulated depreciation of $42,125, for $23,625 cash. c. Purchased equipment costing $108,375 by paying $54,000 cash and signing a long-term note payable for the balance. d. Borrowed $5,200 cash by signing a short-term note payable. e. Paid $56,125 cash to reduce the long-term notes payable. f. Issued 3.700 shares of common stock for $20 cash per share, g. Declared and paid cash dividends of $52,500. 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 Net income Adjustments to reconcile net income to net cash provided by operations Depreciation expense Inventory increase Accounts receivable increase Prepaid expense decrease Accounts payable decrease $ 0 Not cash provided by operating activities Cash flows from investing activities Cash received from sale of equipment Cash paid for equipment Requireu la 0 Net cash provided by operating activities Cash flows from investing activities Cash received from sale of equipment Cash paid for equipment 0 Net cash used in investing activities Cash flows from financing activities: Cash received from issuing stock Cash paid for dividends Cash paid on long-term note 0 $ 0 Net cash used in financing activities Net increase (decrease) in cash Cash balance at December 31, prior year Cash balance at December 31, current year $ 0
