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12 Required information (The following information applies to the questions displayed below.] 0.83 points eBook 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, (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. Print Prior Year FORTEN COMPANY Comparative Balance Sheets December 31 Current Year Assets Cash $ 60,400 Accounts receivable 76,340 Inventory 286,156 Prepaid expenses 1,280 Total current assets 424,176 Equipment 150,500 Accum. depreciation-Equipment (40, 125) Total assets $534,551 Liabilities and Equity Accounts payable $ 60,141 Short-term notes payable 12,100 Total current liabilities 72,241 Long-term notes payable 61,500 Total liabilities 133,741 Equity Common stock, $5 par value 173,250 Paid-in capital in excess of par, common 48,000 stock Retained earnings 179,560 Total liabilities and equity $534,551 $ 80,500 57,625 258,800 2,035 398,960 115,000 (49,500) $ 464,460 $125,175 7,400 132,575 55,750 188,325 157,250 0 118,885 $ 464,460 FORTEN COMPANY Income Statement For Current Year Ended December 31 Sales $617,500 Cost of goods sold 292,000 Gross profit 325,500 Operating expenses Depreciation expense $ 27,750 Other expenses 139,400 167,150 Other gains (losses) Loss on sale of (12,125) equipment Income before taxes 146,225 Income taxes expense 34,050 Net income $112,175 Additional Information on Current Year Transactions a. The loss on the cash sale of equipment was $12,125 (details in b). b. Sold equipment costing $67,875, with accumulated depreciation of $37,125, for $18,625 cash. c. Purchased equipment costing $103,375 by paying $44,000 cash and signing a long-term note payable for the balance. d. Borrowed $4,700 cash by signing a short-term note payable. e. Paid $53,625 cash to reduce the long-term notes payable. f. Issued 3,200 shares of common stock for $20 cash per share. g. Declared and paid cash dividends of $51,500. 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.) FORTEN COMPANY Statement of Cash Flows For Current Year Ended December 31 Cash flows from operating activities Net income $ 112, 175 Adjustments to reconcile net income to net cash provided by operations: $ 112,175 Cash flows from investing activities Cash flows from financing activities: $ 112,175 Net increase (decrease in cash Cash balance at December 31, prior year Cash balance at December 31, current year $ 112,175
