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 companys income statement and balance sheets follow.

FORTEN COMPANY Comparative Balance Sheets December 31, 2015 and 2014
	2015			2014
Assets
Cash	$	66,249		$	67,500
Accounts receivable		72,825			56,625
Inventory		266,656			239,800
Prepaid expenses		1,420			1,875
Total current assets		407,150			365,800
Equipment		153,275			111,000
Accum. depreciationEquipment		(44,350)			(51,000)
Total assets	$	516,075		$	425,800
Liabilities and Equity
Accounts payable	$	58,975		$	109,850
Short-term notes payable		8,200			5,100
Total current liabilities		67,175			114,950
Long-term notes payable		38,125			38,500
Total liabilities		105,300			153,450
Equity
Common stock, $5 par value		160,750			147,750
Paid-in capital in excess of par, common stock		39,000			0
Retained earnings		211,025			124,600
Total liabilities and equity	$	516,075		$	425,800

FORTEN COMPANY Income Statement For Year Ended December 31, 2015
Sales				$	612,500
Cost of goods sold					297,000
Gross profit					315,500
Operating expenses
Depreciation expense	$	19,100
Other expenses		127,550			146,650
Other gains (losses)
Loss on sale of equipment					(4,275)
Income before taxes					164,575
Income taxes expense					28,750
Net income				$	135,825

Additional Information on Year 2015 Transactions
a.	The loss on the cash sale of equipment was $4,275 (details in b).
b.	Sold equipment costing $44,675, with accumulated depreciation of $25,750, for $14,650 cash.
c.	Purchased equipment costing $86,950 by paying $45,000 cash and signing a long-term note payable for the balance.
d.	Borrowed $3,100 cash by signing a short-term note payable.
e.	Paid $42,325 cash to reduce the long-term notes payable.
f.	Issued 2,600 shares of common stock for $20 cash per share.
g.	Declared and paid cash dividends of $49,400.

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.)