Use the following information for the Problems below. (Algo) [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 Sales Cost of goods sold Gross profit Income Statement For Current Year Ended December 31 Operating expenses (excluding depreciation) Depreciation expense Other gains (losses) Loss on sale of equipment Income before taxes Income taxes expense Net income Assets Cash Accounts receivable Inventory Prepaid expenses $627,500 294,000 333,500 $141,400 29,750 171,150. (14,125) FORTEN COMPANY Comparative Balance Sheets December 31 148,225 36,850 $111,375 Current Year Prior Year $ 63,400 79,360 289,156 1,300 $ 82,500 59,625 260,800 875 Assets Cash Accounts receivable Inventory Prepaid expenses Total current assets. Equipment Accum. depreciation-Equipment Total assets Liabilities and Equity Accounts payable Short-term notes payable Total current liabilities Long-term notes payable Total liabilities Equity FORTEN COMPANY Comparative Balance Sheets December 31 Current Year $ 63,400 79,360 Prior Year $ 82,500 59,625 260,800 289,156 1,300 2,075 433,216 405,000 148,500 117,000 (41,125) (50,500) $540,591 $471,500 $ 62,141 $128,175 12,700 7,800 74,841 135,975 60,500 57,750 135,341 193,725. Common stock, $5 par value 176,250 159,250 Paid-in capital in excess of par, common stock 51,000 8 Retained earnings 178,000 118,525 Total liabilities and equity $540,591 $471,500 Additional Information on Current Year Transactions a. The loss on the cash sale of equipment was $14,125 (details in b). b. Sold equipment costing $73,875, with accumulated depreciation of $39,125, for $20,625 cash. c. Purchased equipment costing $105,375 by paying $48,000 cash and signing a long-term note payable for the balance. d. Borrowed $4,900 cash by signing a short-term note payable. e. Paid $54,625 cash to reduce the long-term notes payable. f. Issued 3,400 shares of common stock for $20 cash per share. Additional Information on Current Year Transactions a. The loss on the cash sale of equipment was $14,125 (details in b). b. Sold equipment costing $73,875, with accumulated depreciation of $39,125, for $20,625 cash. c. Purchased equipment costing $105,375 by paying $48,000 cash and signing a long-term note payable for the balance. d. Borrowed $4,900 cash by signing a short-term note payable. e. Paid $54,625 cash to reduce the long-term notes payable. f. Issued 3,400 shares of common stock for $20 cash per share. g. Declared and paid cash dividends of $51,900. 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. (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 $ Adjustments to reconcile net income to net cash provided by operations: Income statement items not affecting cash Danmciation expense 111,375 2,975 B ts 02:04:40 FORTEN COMPANY Statement of Cash Flows For Current Year Ended December 31 Cash flows from operating activities Net income $ 111,375 Adjustments to reconcile net income to net cash provided by operations: Income statement items not affecting cash Depreciation expense 2,975 Loss on disposal of equipment (14,125) Changes in current assets and current liabilities Increase in accounts receivable (19,735) Increase in inventory (28,356) ( Decrease in prepaid expenses 775 Decrease in accounts payable Net cash provided by operating activities Cash flows from investing activities Cash received from sale of equipment Cash paid for equipment (66,034) 31,500 $ (13,125) 4:32 Required information Decrease in accounts payable Net cash provided by operating activities Cash flows from investing activities Cash received from sale of equipment Cash paid for equipment Net cash used in investing activities Cash flows from financing activities: Cash borrowed on short-term note Cash paid on long-term note: Cash received from issuing stock Cash paid for dividends Net cash used in financing activities Net increase (decrease) in cash Cash balance at December 31, prior year Cash balance at December 31, current year (66,034) 31,500 x $ (13,125) 31,500 0 $ 18,375 $ 18,375