prepare a complete statement of cash flows; report its operating activities using the indirect method

Forten Company, a merchandiser, recently completed its calendar-year 2016 operations. 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. The companys income statement and balance sheets follow. FORTEN COMPANY Comparative Balance Sheets December 31, 2016 and 2015 2016 2015 Assets Cash $ 43,649 $ 62,500 Accounts receivable 65,825 51,625 Inventory 274,156 249,800 Prepaid expenses 1,220 1,625 Total current assets 384,850 365,550 Equipment 143,025 101,000 Accum. depreciationEquipment (33,850 ) (41,000 ) Total assets $ 494,025 $ 425,550 Liabilities and Equity Accounts payable $ 59,975 $ 108,350 Short-term notes payable 6,200 4,100 Total current liabilities 66,175 112,450 Long-term notes payable 37,625 33,500 Total liabilities 103,800 145,950 Equity Common stock, $5 par value 153,250 145,250 Paid-in capital in excess of par, common stock 24,000 0 Retained earnings 212,975 134,350 Total liabilities and equity $ 494,025 $ 425,550 FORTEN COMPANY Income Statement For Year Ended December 31, 2016 Sales $ 587,500 Cost of goods sold 287,000 Gross profit 300,500 Operating expenses Depreciation expense $ 18,100 Other expenses 128,100 146,200 Other gains (losses) Loss on sale of equipment (4,025) Income before taxes 150,275 Income taxes expense 26,250 Net income $ 124,025 Additional Information on Year 2016 Transactions The loss on the cash sale of equipment was $4,025 (details in b). Sold equipment costing $43,425, with accumulated depreciation of $25,250, for $14,150 cash. Purchased equipment costing $85,450 by paying $41,000 cash and signing a long-term note payable for the balance. Borrowed $2,100 cash by signing a short-term note payable. Paid $40,325 cash to reduce the long-term notes payable. Issued 1,600 shares of common stock for $20 cash per share. Declared and paid cash dividends of $45,400. Required: 1. Prepare a complete statement of cash flows; report its operating activities using the indirect method. (Amounts to be deducted should be indicated with a minus sign.)

Required: 1. Prepare a complete statement of cash flows; report its operating activities using the indirect method. FORTEN COMPANY Statement of Cash Flows For Year Ended December 31, 2016 Cash flows from operating activities Net Income Adjustments to reconcile net income to net cash provided by operations Depreciation expense Accounts receivable increase Inventory increase Prepaid expense decrease Accounts payable decrease Loss on disposal of equipment Cash flows from investing activities Cash received from sale of equipment 0 Cash flows from financing activities Cash borrowed on short-term note Cash received from issuing stock Cash paid for dividends Net increase (decrease) in cash Cash balance at beginning of year Cash balance at end of year