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 201620172016AssetsCash$61,900$81,500Accounts receivable77,85058,625Inventory287,656259,800Prepaid expenses1,2902,055Total current assets428,696401,980Equipment149,500116,000Accum. depreciationEquipment(40,625)(50,000)Total assets$537,571$467,980Liabilities and EquityAccounts payable$61,141$126,675Short-term notes payable12,4007,600Total current liabilities73,541134,275Long-term notes payable61,00056,750Total liabilities134,541191,025EquityCommon stock, $5 par value178,750158,250Paid-in capital in excess of par, common stock45,5000Retained earnings178,780118,705Total liabilities and equity$537,571$467,980

FORTEN COMPANY

Income Statement

For Year Ended December 31, 2017Sales$622,500Cost of goods sold293,000Gross profit329,500Operating expensesDepreciation expense$28,750Other expenses140,400169,150Other gains (losses)Loss on sale of equipment(13,125)Income before taxes147,225Income taxes expense35,450Net income$111,775

Problem 12-4AA Indirect: Cash flows spreadsheet LO P1, P2, P3, P4

Additional Information on Year 2017 Transactions

1. Net income was $111,775.
2. Accounts receivable increased.
3. Inventory increased.
4. Prepaid expenses decreased.
5. Accounts payable decreased.
6. Depreciation expense was $28,750.
7. Sold equipment costing $70,875, with accumulated depreciation of $38,125, for $19,625 cash. This yielded a loss of $13,125.
8. Purchased equipment costing $104,375 by paying $46,000 cash and(i.)by signing a long-term note payable for the balance.
9. Borrowed $4,800 cash by signing a short-term note payable.
10. Paid $54,125 cash to reduce the long-term notes payable.
11. Issued 3,300 shares of common stock for $20 cash per share.
12. Declared and paid cash dividends of $51,700.