Using the direct method calculate cash flow for operating activities only

Problem 16-5AB Direct: Statement of cash flows @ P5 Refer to Forten Company's financial statements and related information in Problem 16-3A. Required Prepare a complete statement of cash flows using the direct method. Disclose any noncash investing and financing activities in a note. Check Cash used in financing activities, $(46,225) Problem 16-3A Indirect: Statement of cash flows @ 1 P2 P3 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. FORTEN COMPANY Income Statement For Current Year Ended December 31 $582,500 285,000 297,500 Sales Cost of goods sold Gross profit Operating expenses Depreciation expense Other expenses Other gains (losses) Loss on sale of equipment Income before taxes $ 20,750 132,400 153,150 (5,125) 139,225 Income taxes expense 24,250 Net income $114,975 FORTEN COMPANY Comparative Balance Sheets December 31 Current Year Prior Year Assets Cash $ 49,800 $ 73,500 Accounts receivable 65,810 275,656 50,625 251,800 Inventory Prepaid expenses Total current assets 1,250 392,516 157,500 |(36,625) 1,875 377,800 108,000 (46,000) $439,800 $513,391 Equipment Accum. depreciation Equipment Total assets Liabilities and Equity Accounts payable Short-term notes payable $ 53,141 $114,675 10,000 6,000 Total current liabilities Long-term notes payable Total liabilities 63,141 65,000 128,141 120,675 48,750 169,425 162,750 150,250 Equity Common stock, $5 par value Paid-in capital in excess of par, common stock Retained earnings Total liabilities and equity 37,500 O 185,000 120,125 $513,391 $439,800 Additional Information a. The loss on the cash sale of equipment was $5,125 (details in b). b. Sold equipment costing $46,875, with accumulated depreciation of $30,125, for $11,625 cash. c. Purchased equipment costing $96,375 by paying $30,000 cash and signing a long-term note payable for the balance. d. Borrowed $4,000 cash by signing a short-term note payable. e. Paid $50,125 cash to reduce the long-term notes payable. f. Issued 2,500 shares of common stock for $20 cash per share. g. Declared and paid cash dividends of $50,100. Page 605 Required 1. Prepare a complete statement of cash flows using the indirect method for the current year. Disclose any noncash investing and financing activities in a note. Check Cash from operating activities, $40,900