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 Prior Year FORTEN COMPANY Comparative Balance Sheets December 31 Current Year Assets Cash $ 57,400 Accounts receivable 73,320 Inventory 283, 156 Prepaid expenses 1,260 Total current assets 415, 136 Equipment 152,500 Accum. depreciation-Equipment (39,125) Total assets $528,511 Liabilities and Equity Accounts payable $ 58,141 Short-term notes payable 11,500 Total current liabilities 69,641 Long-term notes payable 62,500 Total liabilities 132,141 $ 78,500 55,625 256,800 1,995 392,920 113,000 (48,500) $457,420 $122,175 7,000 129,175 53,750 182,925 62,500 132, 141 53,750 182,925 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 155, 250 170,250 45,000 181,120 $528,511 119,245 $457,420 FORTEN COMPANY Income Statement For Current Year Ended December 31 Sales $607,500 Cost of goods sold 290,000 Gross profit 317,500 Operating expenses Depreciation expense $ 25,750 Other expenses 137,400 163, 150 Other gains (losses) Loss on sale of equipment (10,125) Income before taxes 144, 225 Income taxes expense 31,250 Net income $112,975 Additional Information on Current Year Transactions a. The loss on the cash sale of equipment was $10,125 (details in 6). b. Sold equipment costing $61,875, with accumulated depreciation of $35,125, for $16,625 cash. c. Purchased equipment costing $101,375 by paying $40,000 cash and signing a long-term note payable for the balance. d. Borrowed $4,500 cash by signing a short-term note payable e. Paid $52,625 cash to reduce the long-term notes payable. f. Issued 3,000 shares of common stock for $20 cash per share. g. Declared and paid cash dividends of $51,100. Required: 1. Prepare a complete statement of cash flows using the Indirect method for the current year. (Amounts to be deducted sho indicated with a minus sign.) FORTEN COMPANY Statement of Cash Flows For Current Year Ended December 31 Cash flows from operating activities Adjustments to reconcile net income to not cash provided by operations: Cash flows from investing activities Cash flows from financing activities: Net increase (decrease) in cash Cash balance at December 31, prior year Cash balance at December 31, current year
