Forten Company, a merchandiser, recently completed its calendar-year 2018 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, balance sheets, and additional information follow FORTEN COMPANY Comparative Balance Sheets December 31, 2018 and 2017 2018 2017 y $ 61,900 77,850 287.656 1.290 425696 149,500 0625 S1597,571 $ 81,500 58,625 259,800 2. OSS 402,980 126,000 (50,000 5462,980 Assets Cash Accounts receivable Inventory Prepaid expenses Total current assets Equipment Accum. depreciation Equipment Total assets Liabilities and Equity Accounts payable Short-ter notes payable Total current liabilities Long-ter notes payable Total liabilities Equity Common stock, 35 par value Paid in capital in excess of par, common stock Retained earnings Total abilities and equity S62141 52, 20.541 0.000 234 541 126,625 7.600 134,235 SE250 39125 162,250 198,750 49,500 174780 553257 114705 5462.980 5 622,500 223.000 329,500 FORTEN COMPANY Income Statement For Year Ended December 31, 2015 Soles Cost of goods sold Gross profit Operating expenses Depreciation expense 520,750 Other expenses 140,400 Other gains (losses) Loss on sale of equipent Income before taxes Inco taxes expense Net Income 169,150 (125) 147,225 35.450 111,775 $ 622,500 293,029 329,500 FORTEN COMPANY Income Statement For Year Ended December 31, 2018 Sales Cost of goods sold Gross profit Operating expenses Depreciation expense $ 28,750 Other expenses 140,400 Other gains (losses) Loss on sale of equipment Income before taxes Income taxes expense Net Income 169,150 (13.125) 147,225 35,450 $ 111,775 Additional Information on Year 2018 Transactions a. The loss on the cash sale of equipment was $13,125 (details in ) b. Sold equipment costing $70,875, with accumulated depreciation of $38,125, for $19.625 cash. c. Purchased equipment costing $104.375 by paying $46.000 cash and signing a long-term note payable for the balance d. Borrowed $4,800 cash by signing a short-term note payable e. Paid $54,125 cash to reduce the long-term notes payable f.issued 3,300 shares of common stock for $20 cash per share 9. Declared and paid cash dividends of $51700 Required: 1. Prepare a complete statement of cash flows; report its operating activities using the Indirect method (Amounts to be deducted should be indicated with a minus sign.) FORTEN COMPANY Statement of Cash Flows For Year Ended December 31, 2018 Cash flows from operating activities Net Income S 111.775 Adjustments to reconcile net income to net cash provided by operations Income statement items not affecting cash DIUIU ILGU WILL FRIUS DIUI. Required information Statement of Cash Flows For Year Ended December 31, 2018 Cash flows from operating activities Net income $ 111,775 Adjustments to reconcile net income to net cash provided by operations: Income statement items not affecting cash Depreciation expense Loss on disposal of equipment Changes in current assets and current liabilities Accounts receivable increase Inventory increase Prepaid expense decrease Accounts payable decrease $ 111.775 Net cash provided by operating activities Cash flows from investing activities Cash received from sale of equipment Cash paid for equipment 0 Net cash used in investing activities Cash flows from financing activities: 0 111.775 $ Net increase (decrease) in cash Cash balance at December 31, 2017 Cash balance at December 31, 2018 $ 111.775
