Required information Use the following information for the Problems below. (Static) [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 PORTEN COMPANY Income Statement For Current Year Ended December 31 Sales $ 582,500 cost of goods nold 285,000 Cross profit 297,500 Operating expenses (excluding depreciation) $ 132,400 Depreciation expense 20,250 153, 150 Other gains (losos) Loss on sale of equipment (5,125) Income before taxes 139,225 Income taxes expense 24,250 $ 114,975 Net income FORTEN COMPANY Comparative Balance Sheets December 31 Current Year Prior Year 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 $ 49,800 65,810 275,656 1.250 392,516 157,500 (36,625) $ 513,391 $ 73,500 50,625 251,800 1,875 377,800 108,000 (46,000) $ 439,800 $ 53,141 75,000 128,141 $ 114,675 54,750 169,425 162, 750 37,500 185,000 $ 513,391 150,250 0 120,125 $ 439,800 Additional Information on Current Year Transactions a. The loss on the cash sale of equipment was $5,125 (details in b). b. Sold equipment costing $46,875, with accumulated depreciation of $30,125, for $11,625 cash. c. Purchased equipment costing $96,375 by paying $30,000 cash and signing a long-term notes payable for the balance. d. Paid $46,125 cash to reduce the long-term notes payable. e. Issued 2,500 shares of common stock for $20 cash per share. f. Declared and paid cash dividends of $50,100, FORTEN COMPANY Statement of Cash Flows For Current Year Ended December 31 Cash flows from operating activities $ 0 Cash flows from investing activities 0 es Cash flows from financing activities 0 $ 0 Net increase (decrease) in cash Cash balance at December 31, prior year Cash balance at December 31, current year $ 0 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.) $ 114,975 FORTEN COMPANY Statement of Cash Flows For Current Year Ended December 31 Cash flows from operating activities Net Income Adjustments to reconcile net income to net cash provided by operations: Income statement Moms not affecting cash Depreciation expense Loss on disposal of equipment Changes in current assets and current abilities Increase in inventory Decrease in prepaid expenses Decrease in accounts payable Increase in accounts receivable 20.750 5,125 (23.856) 625 (61,534) (15,185) 4,000 Net cash provided by operating activities Cash flows from investing activities $ 44,900
