Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Required information Skip to question [ The following information applies to the questions displayed below. ] Forten Company's current year income statement, comparative balance sheets,

Required information
Skip to question
[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, and (4) all debits to Accounts Payable reflect cash payments for inventory.
FORTEN COMPANY
Income Statement
For Current Year Ended December 31
Sales $ 582,500
Cost of goods sold 285,000
Gross profit 297,500
Operating expenses (excluding depreciation) $ 132,400
Depreciation expense 20,750153,150
Other gains (losses)
Loss on sale of equipment (5,125)
Income before taxes 139,225
Income taxes expense 24,250
Net income $ 114,975
FORTEN COMPANY
Comparative Balance Sheets
December 31
Current Year Prior Year
Assets
Cash $ 49,800 $ 73,500
Accounts receivable 65,81050,625
Inventory 275,656251,800
Prepaid expenses 1,2501,875
Total current assets 392,516377,800
Equipment 157,500108,000
Accumulated depreciationEquipment (36,625)(46,000)
Total assets $ 513,391 $ 439,800
Liabilities and Equity
Accounts payable $ 53,141 $ 114,675
Long-term notes payable 75,00054,750
Total liabilities 128,141169,425
Equity
Common stock, $5 par value 162,750150,250
Paid-in capital in excess of par, common stock 37,5000
Retained earnings 185,000120,125
Total liabilities and equity $ 513,391 $ 439,800
Additional Information on Current Year Transactions
The loss on the cash sale of equipment was $5,125(details in b).
Sold equipment costing $46,875, with accumulated depreciation of $30,125, for $11,625 cash.
Purchased equipment costing $96,375 by paying $30,000 cash and signing a long-term notes payable for the balance.
Paid $46,125 cash to reduce the long-term notes payable.
Issued 2,500 shares of common stock for $20 cash per share.
Declared and paid cash dividends of $50,100.
Required:
1. Prepare a complete statement of cash flows using the indirect method for the current year.
Note: Amounts to be deducted should be indicated with a minus sign.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Accounting For Non-Accountants

Authors: David Horner

10th Edition

0749472812, 978-0749472818

More Books

Students also viewed these Accounting questions