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 companys income statement and balance sheets follow FORTEN COMPANY Comparative Balance Sheets December 31, 2017 and 2016 2017 2016 Assets Cash $ 52,900 $ 75,500 Accounts receivable 68,810 52,625 Inventory 278,656 253,800 Prepaid expenses 1,270 1,995 Total current assets 401,636 383,920 Equipment 155,500 110,000 Accum depreciationEquipment (37,625 ) (47,000 ) Total assets $ 519,511 $ 446,920 Liabilities and Equity Accounts payable $ 55,141 $ 117,675 Short term notes payable 10,600 6,400 Total current liabilities 65,741 124,075 Long term notes payable 64,000 50,750 Total liabilities 129,741 174,825 Equity Common stock, $5 par value 166,750 152,250 Paid in capital in excess of par, common stock 39,500 0 Retained earnings 183,520 119,845 Total liabilities and equity $ 519,511 $ 446,920 FORTEN COMPANY Income Statement For Year Ended December 31, 2017 Sales $ 592,500 Cost of goods sold 287,000 Gross profit 305,500 Operating expenses Depreciation expense $ 22,750 Other expenses 134,400 157,150 Other gains (losses) Loss on sale of equipment (7,125 ) Income before taxes 141,225 Income taxes expense 27,050 Net income $ 114,175 Additional Information on Year 2017 Transactions The loss on the cash sale of equipment was $7,125 (details in b ) Sold equipment costing $52,875, with accumulated depreciation of $32,125, for $13,625 cash Purchased equipment costing $98,375 by paying $34,000 cash and signing a long term note payable for the balance Borrowed $4,200 cash by signing a short term note payable Paid $51,125 cash to reduce the long term notes payable Issued 2,700 shares of common stock for $20 cash per share Declared and paid cash dividends of $50,500 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 )

The Answer is in the image, click to view ...

Answered step by step

Verified Expert Solution

Link Copied!

Question

1 Approved Answer

Posted on Sep 13, 2024

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)

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 companys income statement and balance sheets follow.

FORTEN COMPANY Comparative Balance Sheets December 31, 2017 and 2016
	2017			2016
Assets
Cash	$	52,900		$	75,500
Accounts receivable		68,810			52,625
Inventory		278,656			253,800
Prepaid expenses		1,270			1,995
Total current assets		401,636			383,920
Equipment		155,500			110,000
Accum. depreciationEquipment		(37,625	)		(47,000	)
Total assets	$	519,511		$	446,920
Liabilities and Equity
Accounts payable	$	55,141		$	117,675
Short-term notes payable		10,600			6,400
Total current liabilities		65,741			124,075
Long-term notes payable		64,000			50,750
Total liabilities		129,741			174,825
Equity
Common stock, $5 par value		166,750			152,250
Paid-in capital in excess of par, common stock		39,500			0
Retained earnings		183,520			119,845
Total liabilities and equity	$	519,511		$	446,920

FORTEN COMPANY Income Statement For Year Ended December 31, 2017
Sales			$	592,500
Cost of goods sold				287,000
Gross profit				305,500
Operating expenses
Depreciation expense	$	22,750
Other expenses		134,400		157,150
Other gains (losses)
Loss on sale of equipment				(7,125	)
Income before taxes				141,225
Income taxes expense				27,050
Net income			$	114,175

Additional Information on Year 2017 Transactions

The loss on the cash sale of equipment was $7,125 (details in b).

Sold equipment costing $52,875, with accumulated depreciation of $32,125, for $13,625 cash.

Purchased equipment costing $98,375 by paying $34,000 cash and signing a long-term note payable for the balance.

Borrowed $4,200 cash by signing a short-term note payable.

Paid $51,125 cash to reduce the long-term notes payable.

Issued 2,700 shares of common stock for $20 cash per share.

Declared and paid cash dividends of $50,500.

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.)