Problem 12-2AA Indirect: Cash flows spreadsheet LO P1, P2, P3, P4

Forten Company, a merchandiser, recently completed its calendar-year 2013 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 balance sheets and income statement follow.

FORTEN COMPANY Comparative Balance Sheets December 31, 2013 and 2012
	2013			2012
Assets
Cash	$	49,800		$	74,000
Accounts receivable		65,860			56,000
Merchandise inventory		278,000			251,500
Prepaid expenses		1,000			1,800
Equipment		157,500			106,000
Accum. depreciationEquipment		(41,750)			(52,000)
Total assets	$	510,410		$	437,300
Liabilities and Equity
Accounts payable	$	57,685		$	113,000
Short-term notes payable		10,000			7,000
Long-term notes payable		62,500			48,000
Common stock, $5 par value		162,500			150,250
Paid-in capital in excess of par, common stock		36,750			0
Retained earnings		180,975			119,050
Total liabilities and equity	$	510,410		$	437,300

FORTEN COMPANY Income Statement For Year Ended December 31, 2013
Sales				$	584,000
Cost of goods sold					286,000
Gross profit					298,000
Operating expenses
Depreciation expense	$	20,000
Other expenses		133,200			153,200
Other gains (losses)
Loss on sale of equipment					(5,125)
Income before taxes					139,675
Income taxes expense					24,250
Net income				$	115,425

Additional Information on Year 2013 Transactions

a.	Net income was $115,425.
b.	Accounts receivable increased.
c.	Merchandise inventory increased.
d.	Prepaid expenses decreased.
e.	Accounts payable decreased.
f.	Depreciation expense was $20,000.
g.	Sold equipment costing $46,875, with accumulated depreciation of $30,250, for $11,500 cash. This yielded a loss of $5,125.
h.	Purchased equipment costing $98,375 by paying $35,000 cash and (i.) by signing a long-term note payable for the balance.
j.	Borrowed $3,000 cash by signing a short-term note payable.
k.	Paid $48,875 cash to reduce the long-term notes payable.
l.	Issued 2,450 shares of common stock for $20 cash per share.
m.	Declared and paid cash dividends of $53,500.

Required:

Prepare a complete statement of cash flows using a spreadsheet; report its operating activities using the indirect method. (Enter all amounts as positive values.)

Forten Company

Spreadsheet for statement of Cash Flows

For Year Ended December 31, 2013

Balance sheet-debit balance accounts - Dec. 31, 2012 - Debit - Credit - Dec. 31, 2013

Cash $74000.00 - $ - $ - $49800.00

Accounts receivable $56000.00 - $ - $ - $

Merchandise inventory $251,500.00 - $ - $ - $

Prepaid expenses $1,800.00 - $ - $ - $

Equipment $106,000.00 - $ - $ - $

Total: $489,300.00 - $49,000.00

BALANCE Sheet-credit balance accounts Dec. 31, 2012 - Debit - Credit

Accumulated depreciation-Equipment $52,000.00- - $ - $

Accounts payable $113,000.00- - $ -$

Short-term notes payable $7,000.00- -$ -$

Long-term notes payable $48,000.00- - $ -$

Common stock, $5 par value $150,250.00 - -$ -$

Paid-In capital in excess of par value common stock - $0.00 -$ -$

Retained earnings $119,050.00 -$ -$

Total: $489,300.00 -$

STATEMENT OF CASH FLOWS

OPERATING ACTIVITIES Debit Credit

Net Income -$ -$

Increase in accounts receivable -$ -$

Increase in merchandise inventory -$ -$

Decrease in prepaid expenses -$ -$

Decrease in accounts payable -$ -$

Depreciation expense -$ -$

Loss on sale of equipment -$ -$

INVESTING ACTIVITIES

Receipt from sale of equipment -$ -$

Payment to purchase equipment -$ -$

FINANCING ACTIVITIES

Borrowed on short-term note -$ -$

Payment on long-term note -$ -$

Issued common stock for cash -$ -$

Payments of cash dividends -$ -$

NON CASH INVESTING & FINANCING ACTIVITIES

Purchas of equpment financed by long-term note payable -$ -$

Total: -$ -$