Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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

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 companys income statement and balance sheets follow.

FORTEN COMPANY Comparative Balance Sheets December 31, 2017 and 2016
2017 2016
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
Accum. depreciationEquipment (37,125 ) (46,500 )
Total assets $ 516,541 $ 443,450
Liabilities and Equity
Accounts payable $ 54,141 $ 116,175
Short-term notes payable 10,300 6,200
Total current liabilities 64,441 122,375
Long-term notes payable 64,500 49,750
Total liabilities 128,941 172,125
Equity
Common stock, $5 par value 164,750 151,250
Paid-in capital in excess of par, common stock 38,500 0
Retained earnings 184,350 120,075
Total liabilities and equity $ 516,541 $ 443,450

FORTEN COMPANY Income Statement For Year Ended December 31, 2017
Sales $ 587,500
Cost of goods sold 286,000
Gross profit 301,500
Operating expenses
Depreciation expense $ 21,750
Other expenses 133,400 155,150
Other gains (losses)
Loss on sale of equipment (6,125 )
Income before taxes 140,225
Income taxes expense 25,650
Net income $ 114,575

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

Additional Information on Year 2017 Transactions

  1. Net income was $114,575.
  2. Accounts receivable increased.
  3. Inventory increased.
  4. Prepaid expenses decreased.
  5. Accounts payable decreased.
  6. Depreciation expense was $21,750.
  7. Sold equipment costing $49,875, with accumulated depreciation of $31,125, for $12,625 cash. This yielded a loss of $6,125.
  8. Purchased equipment costing $97,375 by paying $32,000 cash and (i.) by signing a long-term note payable for the balance.
  9. Borrowed $4,100 cash by signing a short-term note payable.
  10. Paid $50,625 cash to reduce the long-term notes payable.
  11. Issued 2,600 shares of common stock for $20 cash per share.
  12. Declared and paid cash dividends of $50,300.

Required: Prepare a complete statement of cash flows using a spreadsheet; report its operating activities using the indirect method. (Enter all amounts as positive values.)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Auditing A Complete Guide

Authors: Gerardus Blokdyk

2023rd Edition

1038805538, 978-1038805539

More Books

Students also viewed these Accounting questions