! Required information [The following information applies to the questions displayed below.] Rectangular Shine 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. $ 582,500 285,000 297,500 FORTEN COMPANY Income Statement For Current Year Ended December 31 Sales Cost of goods sold Gross profit Operating expenses (excluding depreciation) $ 132,400 Depreciation expense 20,750 Other gains (losses) Loss on sale of equipment Income before taxes Income taxes expense Net income 153, 150 (5,125) 139,225 24,250 $ 114,975 FORTEN COMPANY Comparative Balance Sheets December 31 Current Year Prior Year $ 49,800 65,814 275,656 1,250 392,516 157,500 (36,625) $ 513,391 $ 73,500 50,625 251,800 1,875 377,800 108,000 (46,000) $ 439,800 Assets Cash Accounts receivable Inventory Prepaid expenses Total current assets Equipment Accumulated depreciation-Equipment Total assets Liabilities and Equity Accounts payable Long-term notes payable Total liabilities Equity Common stock, $5 par value Paid-in capital in excess of par, common stock Retained earnings Total liabilities and equity $ 53,141 75,000 128,141 $ 114,675 54,750 169,425 150, 250 162,750 37,500 185,000 $ 513,391 120,125 $ 439,800 FORTEN COMPANY Comparative Balance Sheets December 31 Current Year Prior Year $ 49,800 65,810 275,656 1,250 392,516 157,500 (36,625) $ 513,391 $ 73,500 50,625 251,800 1,875 377,800 108,000 (46,000) $ 439,800 Assets Cash Accounts receivable Inventory Prepaid expenses Total current assets Equipment Accumulated depreciation-Equipment Total assets Liabilities and Equity Accounts payable Long-term notes payable Total liabilities Equity Common stock, $5 par value Paid-in capital in excess of par, common stock Retained earnings Total liabilities and equity $ 114,675 $ 53,141 75,000 128,141 54,750 169,425 150, 250 162,750 37,500 185,000 $ 513,391 120,125 $ 439,800 Additional Information on Current Year Transactions a. The loss on the cash sale of equipment was $5,125 (details in b). b. Sold equipment costing $46,875, with accumulated depreciation of $30,125, for $11,625 cash. c. Purchased equipment costing $96,375 by paying $30,000 cash and signing a long-term notes payable for the balance. d. Paid $46,125 cash to reduce the long-term notes payable. e. Issued 2,500 shares of common stock for $20 cash per share. f. Declared and paid cash dividends of $50,100. Required: Prepare a complete statement of cash flows using the direct method. (Amounts to be deducted should be indicated with a minus sign.) Required: Prepare a complete statement of cash flows using the direct method. (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 Net income $ 114.975 $ 114.975 Cash flows from investing activities 0 Cash flows from financing activities $ 114,975 Net increase (decrease) in cash Cash balance at December 31, prior year Cash balance at December 31, current year $ 114,975
