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, (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. Prior Year FORTEN COMPANY Comparative Balance Sheets December 31 Current Year Assets Cash $ 70,900 Accounts receivable 86,910 Inventory 296,656 Prepaid expenses 1, 350 Total current assets 455,816 Equipment 143,500 Assum. depreciation-Equipment (43,625) Total assets $ 555, 691 Liabilities and Equity Accounts payable $ 67, 141 Short-term notes payable 14,200 Total current liabilities 81, 341 Long-term notes payable 58,000 Total liabilities 139, 341 Equity Common stock, $5 par value 183,750 Paid-in capital in excess of par, 58,500 common stock Retained earnings 174, 100 Total liabilities and equity $ 555, 691 $ 87,500 64,625 265, 800 2,175 420, 100 122,000 (53,000) $489, 100 $135, 675 8,800 144,475 62,750 207, 225 164, 250 0 117,625 $489, 100 FORTEN COMPANY Income Statement For Current Year Ended December 31 Sales $652,500 Cost of goods sold 299,000 Gross profit 353,500 Operating expenses Depreciation expense $ 34,750 Other expenses 146,400 181,150 Other gains (losses) Loss on sale of equipment (19,125) Income before taxes 153, 225 Income taxes expense 43,850 Net income $109, 375 Additional Information on Current Year 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 $57,125 cash to reduce the long-term notes payable. f. Issued 3,900 shares of common stock for $20 cash per share. g. Declared and paid cash dividends of $52,900. Required: 1. Prepare a complete statement of cash flows using the indirect method for the current year. (Amounts to be deducted should be indicated with a minus sign.) FORTEN COMPANY Statement of Cash Flows For Current Year Ended December 31 Cash flows from operating activities Adjustments to reconcile net income to net cash provided by operations $0 Cash flows from investing activities Cash flows from financing activities: 0 $O Net increase (decrease) in cash Cash balance at December 31, prior year Cash balance at December 31, current year SO
