Required information Use the following information for the Problems below. [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 $ 66,400 82,380 292,156 1,320 442, 256 146,500 (42,125) $546,631 $ 84,500 61,625 262,800 2,115 411,040 119,000 (51,500) $ 478,540 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 stock Retained earnings Total liabilities and equity $ 64,141 13,300 77,441 59,500 136,941 $131, 175 8, 200 139,375 59,750 199,125 184,750 48,500 176, 440 $546,631 161,250 0 118,165 $478,540 PORTEN COMPANY $637,500 296,000 341,500 FORTEN COMPANY Income Statement For Year Ended December 31, 2017 Sales Cost of goods sold Gross profit Operating expenses Depreciation expense $ 31,750 Other expenses 143,400 Other gains (losses) Loss on sale of equipment Income before taxes Income taxes expense Net income 175,150 (16,125) 150, 225 39,650 $110,575 Problem 12-3A Indirect: Statement of cash flows LO A1, P1, P2, P3 Additional Information on Year 2017 Transactions a. The loss on the cash sale of equipment was $16,125 (details in b). b. Sold equipment costing $79,875, with accumulated depreciation of $41,125, for $22,625 cash. c. Purchased equipment costing $107,375 by paying $52,000 cash and signing a long-term note payable for the balance. d. Borrowed $5,100 cash by signing a short-term note payable. e. Paid $55,625 cash to reduce the long-term notes payable. f. Issued 3,600 shares of common stock for $20 cash per share. 9. Declared and paid cash dividends of $52,300. 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.) 0 Required information FORTEN COMPANY Statement of Cash Flows For Year Ended December 31, 2017 Cash flows from operating activities Net income $ 110,575 Adjustments to reconcile net income to net cash provided by operations: Depreciation expense 31,750 Loss on disposal of equipment 16,125 Accounts receivable increase (20,755) Inventory increase (29,356) Prepaid expense decrease 795 Accounts payable decrease (67,034) $ 42,100 Net cash provided by operating activities Cash flows from investing activities Cash paid for equipment Cash received from sale of equipment (59,500) (59,500) Net cash used in investing activities Cash flows from financing activities: Cash borrowed on short-term note Cash paid on long-term note Cash received from issuing stock Cash paid for dividends Net cash used in financing activities Net Increase (decrease) in cash Cash balance at beginning of year Cash balance at end of year $ 0 (17.400) $ (17.400)
