Required information (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, and (4) all debits to Accounts Payable reflect cash payments for inventory. $ 647,500 298,000 349,500 FORTEN COMPANY Income Statement For Current Year Ended December 31 Sales Cost of goods sold Gross profit Operating expenses (excluding depreciation) $ 145,400 Depreciation expense 33,750 Other gains (losses) Loss on sale of equipment Income before taxes Income taxes expense Net income 179,150 (18,125) 152, 225 42,450 $ 109,775 FORTEN COMPANY Comparative Balance Sheets December 31 Current Year Prior Year $ 69,400 85,400 295, 156 1,340 451, 296 144,500 (43,125 ) $ 552,671 $ 86,500 63,625 264,800 2,155 417,080 121,000 (52,500) $ 485,580 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 $ 66,141 72,400 138,541 $ 134, 175 70,350 204,525 182,250 57,000 174, 880 $ 552,671 163,250 0 117,805 $ 485,580 Additional Information on Current Year Transactions a. The loss on the cash sale of equipment was $18,125 (details in b). b. Sold equipment costing $85,875, with accumulated depreciation of $43,125, for $24,625 cash. c. Purchased equipment costing $109,375 by paying $56,000 cash and signing a long-term notes payable for the balance. d. Paid $51,325 cash to reduce the long-term notes payable. e. Issued 3,800 shares of common stock for $20 cash per share. f. Declared and paid cash dividends of $52,700. Required: Prepare a complete statement of cash flows using the direct method. (Amounts to be deducted should be indicated with a minus sign.) Required information Slalement VI Vasil riuw For Current Year Ended December 31 Cash flows from operating activities Cash received from customers $ 625,725 Cash paid for inventory (396,390) (557,655) (42,450) $ (370,770) Cash paid for operating expenses Cash paid for income taxes Net cash provided by operating activities Cash flows from investing activities Cash paid for equipment Cash received from sale of equipment (56,000) 24,625 (31,375) Net cash used in investing activities Cash flows from financing activities Cash paid on long-term notes Cash received from issuing stock Cash paid for dividends OOO (51,325) 76,000 (52,700) Net cash used in financing activities Net increase (decrease) in cash Cash balance at December 31, prior year Cash balance at December 31, current year (28,025) $ (430,170) 86,500 $ (343,670)
