Question
Use the following information for the Problems below. (Static) [The following information applies to the questions displayed below.] Forten Company's current year income statement, comparative
Use the following information for the Problems below. (Static)
[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 COMPANYIncome StatementFor Current Year Ended December 31Sales$ 582,500Cost of goods sold285,000Gross profit297,500Operating expenses (excluding depreciation)$ 132,400Depreciation expense20,750153,150Other gains (losses)Loss on sale of equipment(5,125)Income before taxes139,225Income taxes expense24,250Net income$ 114,975FORTEN COMPANYComparative Balance SheetsDecember 31Current YearPrior YearAssetsCash$ 49,800$ 73,500Accounts receivable65,81050,625Inventory275,656251,800Prepaid expenses1,2501,875Total current assets392,516377,800Equipment157,500108,000Accumulated depreciationEquipment(36,625)(46,000)Total assets$ 513,391$ 439,800Liabilities and EquityAccounts payable$ 53,141$ 114,675Long-term notes payable75,00054,750Total liabilities128,141169,425EquityCommon stock, $5 par value162,750150,250Paid-in capital in excess of par, common stock37,5000Retained earnings185,000120,125Total liabilities and equity$ 513,391$ 439,800Additional Information on Current Year Transactions
- The loss on the cash sale of equipment was $5,125 (details in b).
- Sold equipment costing $46,875, with accumulated depreciation of $30,125, for $11,625 cash.
- Purchased equipment costing $96,375 by paying $30,000 cash and signing a long-term notes payable for the balance.
- Paid $46,125 cash to reduce the long-term notes payable.
- Issued 2,500 shares of common stock for $20 cash per share.
- Declared and paid cash dividends of $50,100.
Required:
1. Prepare a complete statement of cash flows using the indirect method for the current year.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started