Required information

Use the following information for the Problems below. (Algo)

Skip to question

[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.

FORTEN COMPANY
Income Statement
For Current Year Ended December 31
Sales		$ 587,500
Cost of goods sold		286,000
Gross profit		301,500
Operating expenses (excluding depreciation)	$ 133,400
Depreciation expense	21,750	155,150
Other gains (losses)
Loss on sale of equipment		(6,125)
Income before taxes		140,225
Income taxes expense		25,650
Net income		$ 114,575

FORTEN COMPANY
Comparative Balance Sheets
December 31
	Current Year	Prior Year
Assets
Cash	$ 51,400	$ 74,500
Accounts receivable	67,310	51,625
Inventory	277,156	252,800
Prepaid expenses	1,300	2,025
Total current assets	397,166	380,950
Equipment	156,500	109,000
Accumulated depreciationEquipment	(37,125)	(46,500)
Total assets	$ 516,541	$ 443,450
Liabilities and Equity
Accounts payable	$ 54,141	$ 116,175
Long-term notes payable	74,800	55,950
Total liabilities	128,941	172,125
Equity
Common stock, $5 par value	164,250	151,250
Paid-in capital in excess of par, common stock	39,000	0
Retained earnings	184,350	120,075
Total liabilities and equity	$ 516,541	$ 443,450

Additional Information on Current Year Transactions

The loss on the cash sale of equipment was $6,125 (details in b).

Sold equipment costing $49,875, with accumulated depreciation of $31,125, for $12,625 cash.

Purchased equipment costing $97,375 by paying $32,000 cash and signing a long-term notes payable for the balance.

Paid $46,525 cash to reduce the long-term notes payable.

Issued 2,600 shares of common stock for $20 cash per share.

Declared and paid cash dividends of $50,300.

Problem 12-3A (Algo) Indirect: Statement of cash flows LO A1, P2, P3

Required:

1. Prepare a complete statement of cash flows using the indirect method for the current year.

Note: Amounts to be deducted should be indicated with a minus sign.

FORTEN COMPANY
Statement of Cash Flows
For Current Year Ended December 31
Cash flows from operating activities
Net income	$114,575
Adjustments to reconcile net income to net cash provided by operations:
Income statement items not affecting cash
Changes in current assets and current liabilities
		$114,575
Cash flows from investing activities
		0
Cash flows from financing activities:
		0
Net increase (decrease) in cash		$114,575
Cash balance at December 31, prior year
Cash balance at December 31, current year		$114,575