Required information [The following information applies to the questions displayed below.] 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 2017 2016 Assets Accounts receivable Inventory Prepaid expenses Total current assets Equipment Accum. depreciation-Equipment Total assets Liabilities and Equity Accounts payable Short-term notes payable $ 70,900 86,910 296,656 1.350 455,816 143.5ee (43,625) $ 555,691 $ 87,500 64,625 265,800 2.175 42e. 109 122.ee (53,000) $ 489, lee $ 67,141 14,200 $ 135,675 8,800 FORTEN COMPANY Comparative Balance Sheets December 31, 2017 and 2016 2017 2016 $ 70,900 86,910 296,656 1,350 455,816 143,500 (43,625) $ 555,691 $ 87,500 64,625 265,800 2,175 420, 100 122, eee (53, eee) $ 489, 100 Assets Cash Accounts receivable Inventory Prepaid expenses Total current assets Equipment Accum. depreciation-Equipment Total assets Liabilities and Equity Accounts payable Short-term notes payable Total current liabilities Long-term notes payable Total liabilities Equity Common stock, $5 par value Paid-in capital in excess of par, common Retained earnings Total liabilities and equity $ 67,141 14,200 81,341 58, eee 139,341 $ 135,675 8,888 144,475 62,758 287, 225 164, 250 190, 750 51,500 174,100 $ 555, 691 117,625 $ 489, 180 $ 652,500 299,000 353,500 FORTEN COMPANY Income Statement For Year Ended December Sales Cost of goods sold Gross profit Operating expenses Depreciation expen Other expenses Other gains (losses) Loss on sale of equi Income before taxes Income taxes expense Net income 181, 150 (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 $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. Pri Required: 1. Prepare a complete statement of cash flows; report its operating activities using the indirect method (Amounts to be deducted should be indicated with a minus sign.) 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: Docrociation expense 34750 Loss on disposal of equipment (19,125) 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: Depreciation expense 34,750 Loss on disposal of equipment (19,125) Accounts receivable increase Inventory increase Prepaid expense decrease Accounts payable decrease $ 125,000 Cash flows from investing activities Required information Inventory increase Prepaid expense decrease Accounts payable decrease $ 125,000 Cash flows from investing activities Cash flows from financing activities: $ 125,000 Net increase (decrease) in cash Cash balance at beginning of year Cash balance at end of year $ 125,000
