Required information Forten Company, a merchandiser, recently completed its calendar year 2017 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, 2017 and 2016 2012 2016 5 70,90 87,500 86,910 64,625 996,656 265,500 1,350 2-175 455810 420, 100 143,500 122. (43,625) (52 000) 555,691 1 489,160 5 Assets Cash Accounts receivable Inventory Prepaid expenses Total current assets Equipment Accum. depreciation-Equipent Total assets Liabilities and Equity Accounts payable Short-ters notes payable Total current liabilities Long-term notes payable Total liabilities Equity Common stock, 55 par value Paid-in capital in excess of par, common stock Retained earnings Total liabilities and equity $ 67,161 14, 200 81,341 5.000 119,141 235,675 1.800 144,475 62,250 207,225 164,250 190, 750 51,500 174,100 $ 555,6015 112,625 409,100 arch O PRE F Required information FORTEN COMPANY Income Statement For Year Ended December 31, 2017 $ 652,500 299,000 353,500 Sales Cost of goods sold Gross profit Operating expenses Depreciation expense Other expenses Other gains (losses) Loss on sale of equipment Income before taxes Income taxes expense Net income $ 34,750 146,400 181,158 (19,125) 153, 225 43,850 $ 109, 375 Additional Information on Year 2017 Transactions a. The loss on the cash sale of equipment was $19.125 (details in b). b. Sold equipment costing $88,875, with accumulated depreciation of $44.125. for $25,625 cash c. Purchased equipment costing $110.375 by paying $58,000 cash and signing a long term note payable for the balance. d. Borrowed $5,400 cash by signing a short-term note payable. e. Paid $57125 cash to reduce the long-term notes payable. f. Issued 3.900 shares of common stock for $20 cash per share. 9. Declared and pold cash dividends of $52.900. FORTEN COMPANY Statement of Cash Flows For Year Ended December 31, 2017 Cash flows from operating activities Net income $ 109,375 Adjustments to reconcile net income to net cash provided by operations Accounts receivable increase Inventory increase Prepaid expense decrease Accounts payable decrease Depreciation expense Loss on disposal of equipment $ $ 109,375 Net cash provided by operating activities Cash flows from investing activities Cash received from sale of equipment Cash paid for 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 naid for dividends
