Problem 16-3A Indirect Statement of cash flows A1 P2 P3 Forten Company's current your income statement, comparative balance sheets, and additional information fol- low. For the year, (I) all sales are credit sales, (2) all credits to Accounts Receivable reflect cash receipts from customers, (3) all purchases of inventory 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 FORTIN COMPANY Income talent For Current Bed December 31 FORTEN COMPANY Cumptive Bance sheets December 31 Current Year Prler tar 5582.500 215.000 297.500 Cest of goods sold po Overige Drops Other Other Loft before consente $ 20,750 12.000 Assets C Accounce Inwestory Prepaid Jual 153.150 $49.000 05.10 275,656 1.250 292.50 157.500 620 38 $ 73.500 50.625 51.000 2018 377.000 100.000 000) 2009 125.21 20.750 1110 To Landy Abe SS Town Long 3.1.141 10000 6141 A. 21 51146 5.000 120.675 300 Mini Currenterian The low on the short 5.125 Social 130.125.11.ch Pequent coding 36.375 $30.000 signing along the for 4.000 hinge 0.125th 2.500 h. ah per share Dans to 162.750 caso 15. 0 20.125 E 100 000 111 Required 1. Prepare a complete statement of cash flows using the indirect method for the current year. Disclose any noncash investing and financing activities in a note. Analysis Component 2. Analyze and discuss the statement of cash flows prepared in part 1. giving special attention to the wisdom of the cash dividend payment. Problem 16-3A Indirect Statement of cash flows A1 P2 P3 Forten Company's current-year income statement, comparative balance sheets, and additional information fol- low. For the year, (1) all sales are credit sales, (2) all credits to Accounts Receivable reflect cash recipes 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. FORTIN COMPANY Income Statement For Current Year Ended December 31 FORTEN COMPANY Comparative Balance Sheets December 1 Current Year Prior Year $582.500 285,000 297,500 Sales Cost of goods sold Gross profit Operating expenses Depreciation expense Other expenses Other in losses Loss on sale of equipment Income before true Income taxes expense Net income $ 20.750 132400 153,150 Assets Cash Accounts receivable inventory Prepaid expenses Total current Equipment Accum depreciatiouipment Total assis $ 49,800 65.810 275,656 1.250 392,516 157.500 36,625 $ 73,500 50,625 251,800 1875 377,000 108.000 146,000 5439 300 139.225 24,250 $114,275 Labilities and Equity Accounts payable Somnoles payable Totalcariabilities Long-lentes payabile Touloides $ 53,141 10.000 61.141 55.000 T28141 3514,675 6,000 120.675 41.750 169,423 Additional information on Current Year Transactions The loss on the cash sale of equipment was 55,125 details in b. Sold equipment conting $46.875, with accumulated deprecation of $30.125, for $11.625 & Purchased equipment costing 596.175 by saying 530.000 cash and signing a long-term note payable for the balance d. Borrowed 54000 cash by signing shoemote pyetle e Poid 550.125 cash to reduce the long-term notes payable Lissued 2.500 shares of common stock for 520 cash per Decated and and cash dividends of 550.100. 150 20 Equity Common stock, 55 para Pad Gecess of a common stock Retained earrings Total lobisties and equity 162,50 37.500 185.000 $S11 130 125 5419,300
