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 $ $587,500$

Cost of goods sold $286,000$

Gross profit $301,500$

Operating expenses $($excluding depreciation$)$ $ $133,400$

Depreciation expense $21,750155,150$

Other gains $($losses$)$

Loss on sale of equipment $(6,125)$

Income before taxes $140,225$

Income taxes expense $25,650$

Net income $ $114,575$

FORTEN COMPANY

Comparative Balance Sheets

December $31$

Current Year Prior Year

Assets

Cash $ $51,400$ $ $74,500$

Accounts receivable $67,31051,625$

Inventory $277,156252,800$

Prepaid expenses $1,3002,025$

Total current assets $397,166380,950$

Equipment $156,500109,000$

Accumulated depreciation$$Equipment $(37,125)(46,500)$

Total assets $ $516,541$ $ $443,450$

Liabilities and Equity

Accounts payable $ $54,141$ $ $116,175$

Long$-$term notes payable $74,80055,950$

Total liabilities $128,941172,125$

Equity

Common stock, $$5$ par value $164,250151,250$

Paid$-$in capital in excess of par, common stock $39,0000$

Retained earnings $184,350120,075$

Total liabilities and equity $ $516,541$ $ $443,450$

Additional Information on Current Year Transactions

The loss on the cash sale of equipment was $$6,125($details in b$).$

Sold equipment costing $$49,875,$ with accumulated depreciation of $$31,125,$ for $$12,625$ cash.

Purchased equipment costing $$97,375$ by paying $$32,000$ cash and signing a long$-$term notes payable for the balance.

Paid $$46,525$ cash to reduce the long$-$term notes payable.

Issued $2,600$ shares of common stock for $$20$ cash per share.

Declared and paid cash dividends of $$50,300.$

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.