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 Cash Accounts receivable Inventory Prepaid expenses Total current assets Equipment Accum. depreciation-Equipment Total assets $ 63,400 82,500 59,625 260,800 2,075 433,216 405,000 148,500 117,000 50,500 $540,591 $471,500 79,360 289,156 1,300 41,125 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 stock Retained earnings Total liabilities and equity $ 62,141 $128,175 7,800 135,97!5 57,750 193,725 12,700 74,841 60,500 135,341 180,750 159,250 46,500 178,000 _118,525 $540,591 $471,500 FORTEN COMPANY Income Statement For Year Ended December 31, 2017 Sales Cost of goods sold Gross profit Operating expenses $627,500 294,000 333,500 Depreciation expense Other expenses $ 29,750 141,400 171,150 Other gains (losses) Loss on sale of equipment (14,125) Income before taxes Income taxes expense Net income 148,225 36, 850 $111,375 Additional Information on Year 2017 Transactions a. The loss on the cash sale of equipment was $14,125 (details in b). b. Sold equipment costing $73,875, with accumulated depreciation of $39,125, for $20,625 cash. c. Purchased equipment costing $105,375 by paying $48,000 cash and signing a long-term note payable for the balance. d. Borrowed $4,900 cash by signing a short-term note payable. e. Paid $54,625 cash to reduce the long-term notes payable. f Issued 3,400 shares of common stock for $20 cash per share. g. Declared and paid cash dividends of $51,900. 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 Adjustments to reconcile net income to net cash provided by operations Cash flows from investing activities Cash flows from financing activities Net increase (decrease) in cash Cash balance at beginning of year Cash balance at end of year 0
