Problem 12-3A Indirect: Statement of cash flows LO A1, P1, P2, P3 Forten Company, a merchandiser, recently completed its calendar-year 2015 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 company's income statement and balance sheets follow FORTEN COMPANY Comparative Balance Sheets December 31, 2015 and 2014 2015 2014 Assets Cash Accounts receivable Inventory Prepaid expenses $ 46,554 66,525 273,406 1,240 63,000 52,125 248,800 1,650 387,725 144,050 (34,900) 365,575 102,000 (42,000) Total current assets Equipment Accum. depreciation-Equipment 496,875 $425,575 Total assets Liabilities and Equity Accounts payable Short-term notes payable $ 59,875 $108,500 6,400 4,200 66,275 37,075 Total current liabilities 112,700 34,000 Long-term notes payable Total liabilities 103,350 146,700 ul Common stock, $5 par value Paid-in capital in excess of par, common stock Retained earnings 154,000 25,500 214,025 145,500 0 133,375 Total liabilities and equity $496,875 $425,575 FORTEN COMPANY Income Statement For Year Ended December 31, 2015 $590,000 288,000 Sales Cost of goods sold Gross profit Operating expenses Depreciation expense 302,000 $ 18,200 126,800 145,000 r expenses Other gains (losses) Loss on sale of equipment (4,050) Income before taxes 152,950 26,500 Income taxes expense $126,450 Net income Additional Information on Year 2015 Transactions a. The loss on the cash sale of equipment was $4,050 (details in b) b. Sold equipment costing $43,550, with accumulated depreciation of $25,300, for $14,200 cash c. Purchased equipment costing $85,600 by paying $42,000 cash and signing a long-term note payable for the balance d. Borrowed $2,200 cash by signing a short-term note payable e. Paid $40,525 cash to reduce the long-term notes payable f. Issued 1,700 shares of common stock for $20 cash per share g. Declared and paid cash dividends of $45,800 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.) FORTEN COMPANY Statement of Cash Flows For Year Ended December 31, 2015 Cash flows from operating activities Net Income Adjustments to reconcile net income to net cash provided by operations Cash flows from investing activities 0 Cash flows from financing activities Net increase (decrease) in cash 0 Cash balance at beginning of year Cash balance at end of year
