Problem 12-5AB Direct: Statement of cash flows LO P5

Required: Prepare a complete statement of cash flows using the direct method.

Required information Use the following information for the Problems below. [The following information applies to the questions displayed below.] 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. FORTEN COMPANY Comparative Balance Sheets December 31 Current Year Prior Year $ 79,900 95,970 305,656 1,410 482,936 137,500 (46,625 ) $573, 811 $ 93,500 70, 625 271,800 2,295 438,220 128,000 (56,000) $510,220 Assets Cash Accounts receivable Inventory Prepaid expenses Total current assets Equipment Accum. depreciation-Equipment Total assets Liabilities and Equity Accounts payable Short-term notes payable Total current liabilities 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 $ 73,141 16,000 89,141 55,000 144,141 $144,675 10,000 154, 675 68,750 223, 425 192,750 67,500 169, 420 $573, 811 170, 250 0 116,545 $510,220 $682,500 305,000 377,500 FORTEN COMPANY Income Statement For Current Year Ended December 31 Sales Cost of goods sold Gross profit Operating expenses Depreciation expense $ 40,750 Other expenses 152,400 Other gains (losses) Loss on sale of equipment Income before taxes Income taxes expense Net income 193,150 (25, 125) 159, 225 52,250 $ 106,975 Additional Information on Current Year Transactions a. The loss on the cash sale of equipment was $25,125 (details in b). b. Sold equipment costing $106,875, with accumulated depreciation of $50,125, for $31,625 cash. c. Purchased equipment costing $116,375 by paying $70,000 cash and signing a long-term note payable for the balance. d. Borrowed $6,000 cash by signing a short-term note payable. e. Paid $60,125 cash to reduce the long-term notes payable. f. Issued 4,500 shares of common stock for $20 cash per share. g. Declared and paid cash dividends of $54,100. Problem 12-5AB Direct: Statement of cash flows LO P5 Required: Prepare a complete statement of cash flows using the direct method. (Amounts to be deducted should be indicated with a minus FORTEN COMPANY Statement of Cash Flows For Current Year Ended December 31 Cash flows from operating activities Cash received from customers Cash paid for inventory Cash paid for other expenses Cash paid for income taxes $ 0 Net cash provided by operating activities Cash flows from investing activities Cash paid for equipment Cash received from sale of equipment 0 Net cash used in investing activities Cash flows from financing activities Cash borrowed on short-term note Cash paid on long-term note Cash received from issuing stock Cash paid for dividends 0 $ 0 Net cash used in financing activities Net increase (decrease) in cash Cash balance at December 31, prior year Cash balance at December 31, current year 0