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, (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. FORTEN COMPANY Comparative Balance Sheets December 31 Current Year Prior Year Assets Cash $ 55,900 $ 77,500 Accounts receivable 71,810 54,625 Inventory 281,656 255,800 Prepaid expenses 1,250 1,975 Total current assets 410,616 389,900 Equipment 153,500 112,080 Accum. depreciation Equipment (38,625) (48,000) Total assets $525,491 $453,900 Liabilities and Equity Accounts payable $ 57,141 $120,675 Short-term notes payable 11,200 6,880 Total current liabilities 68,341 127,475 Long-term notes payable 63, eee 52,750 Total liabilities 131,341 180,225 Equity Common stock, $5 par value 168,750 154,250 Paid-in capital in excess of par, common stock 43,500 @ Retained earnings 181.900 119,425 Total liabilities and equity $525, 491 $453,900 FORTEN COMPANY Income Statement For Current Year Ended December 31 Sales $682,500 Cost of goods sold 289,000 Gross profit 313,500 Operating expenses Depreciation $ 24,750 expense Other expenses 136,400 161, 150 Other gains (losses) Loss on sale of equipment (9,125) Income before taxes 143, 225 Income taxes expense 29,850 Net income $113,375 Additional Information on Current Year Transactions a. The loss on the cash sale of equipment was $9,125 (details in ) b. Sold equipment costing $58.875, with accumulated depreciation of $34125, for $15,625 cash e Purchased equipment casting $100.375 by paying $38,000 cash and signing a long-term note payable for the balance d. Borrowed $4400 cash by signing a short-term note payable. e. Paid $52,125 cash to reduce the long-term notes payable Issued 2,900 shares of common stock for $20 cash per share. 9. Declared and paid cash dividends of $50,900. Nam Required: 1. Prepare a complete statement of cash flows using the indirect method for the current year. (Amounts to be deducted should be indicated with a minus sign.) Answer is not complete. FORTEN COMPANY Statement of Cash Flows For Current Year Ended December 31 Cash flows from operating activities Net income 113,375 Adjustments to reconcile net income to net cash provided by operations: 24.750 9,125 (17,856) (28,856) 725 (63,534) 4,400 X Is 42,129 Cash flows from investing activities Salaries payable decrease % 15,625 (38,000) (22,375) Cash flows from financing activities: (50,900) (52,125) 58,000 OS (45,025) $ (25,271) Net increase (decrease) in cash Cash balance at December 31. prior year Cash balance at December 31, current year S (25,271)
