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, and (4) all debits to Accounts Payable reflect cash payments for inventory $ 632,500 295,000 337,500 FORTEN COMPANY Income Statement For Current Year Ended December 31 Sales Cost of goods sold Gross profit Operating expenses (excluding depreciation) $ 142,400 Depreciation expense 30, 750 Other gains (losses) Loss on sale of equipment Income before taxes Income taxes expense Net income 173,150 (15,125) 149,225 38,250 $ 110,975 PORTEN COMPANY Comparative Balance Sheets December 31 Current Year Prior Year $ 64,900 80,870 290,656 1,310 437,736 147,500 (41,625) $ 543,611 $ 83,500 60,625 261,800 2,095 408,020 118,000 (51,000) $ 475,020 Assets Cash Accounts receivable Inventory Prepaid expenses Total current assets Equipment Accumulated depreciation-Equipment Total assets Liabilities and Equity Accounts payable 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 $ 63,141 73,000 136,141 $ 129,675 66,750 196,425 160,250 177,750 52,500 127.220 $ 543,611 118,345 $475,020 Additional Information on Current Year Transactions a. The loss on the cash sale of equipment was $15,125 (details in b). b. Sold equipment costing $76,875, with accumulated depreciation of $40,125, for $21,625 cash, c. Purchased equipment costing $106,375 by paying $50,000 cash and signing a long-term notes payable for the balance. d. Paid $50,125 cash to reduce the long-term notes payable. e. Issued 3,500 shares of common stock for $20 cash per share. f. Declared and paid cash dividends of $52,100. Next > 25 26 of 28 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 Income statement items not affecting cash Depreciation expense Increase in accounts receivable Changes in current assets and current liabilities Increase in inventory Increase in prepaid expenses Decrease in accounts payable Loss on disposal of equipment $ 0 Net cash provided by operating activities Cash flows from investing activities Cash borrowed on short-term note Cash paid on long-term notes Cash received from issuing stock Net cash used in financing activities Cash flows from financing activities: 0 o 0 $ Not Increase (decrease in cash Cash balance at December 31. prior your Cash balance at December 31, current your $ o
