Forten Company, a merchandiser, recently completed itscalendar-year 2017 operations. For the year, (1) all...

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Accounting

Forten Company, a merchandiser, recently completed itscalendar-year 2017 operations. For the year, (1) all sales arecredit sales, (2) all credits to Accounts Receivable reflect cashreceipts from customers, (3) all purchases of inventory are oncredit, (4) all debits to Accounts Payable reflect cash paymentsfor inventory, and (5) Other Expenses are paid in advance and areinitially debited to Prepaid Expenses. The company’s incomestatement and balance sheets follow.
FORTEN COMPANY
Comparative Balance Sheets
December 31, 2017 and 2016
2017 2016
Assets
Cash $69,400 $86,500
Accounts receivable 85,400 63,625
Inventory 295,156 264,800
Prepaid expenses 1,340 2,155
Total current assets 451,296 417,080
Equipment 144,500 121,000
Accum. depreciation—Equipment (43,125) (52,500)
Total assets $552,671 $485,580
Liabilitiesand Equity
Accounts payable $66,141 $134,175
Short-term notes payable 13,900 8,600
Total current liabilities 80,041 142,775
Long-term notes payable 58,500 61,750
Total liabilities 138,541 204,525
Equity
Common stock, $5 par value 188,750 163,250
Paid-in capital in excess of par, common stock 50,500 0
Retained earnings 174,880 117,805
Total liabilities and equity $552,671 $485,580

FORTEN COMPANY
Income Statement
For Year Ended December 31, 2017
Sales $647,500
Costof goods sold 298,000
Gross profit 349,500
Operating expenses
Depreciation expense $33,750
Other expenses 145,400 179,150
Other gains (losses)
Losson sale of equipment (18,125)
Income before taxes 152,225
Income taxes expense 42,450
Netincome $109,775

Additional Information on Year 2017 Transactions
The loss on the cash sale of equipment was $18,125 (details inb).
Sold equipment costing $85,875, with accumulated depreciation of$43,125, for $24,625 cash.
Purchased equipment costing $109,375 by paying $56,000 cash andsigning a long-term note payable for the balance.
Borrowed $5,300 cash by signing a short-term note payable.
Paid $56,625 cash to reduce the long-term notes payable.
Issued 3,800 shares of common stock for $20 cash per share.
Declared and paid cash dividends of $52,700.
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 minussign.)

FORTEN COMPANY
Comparative Balance Sheets
December 31, 2017 and 2016
	2017	2016
	Assets
Cash	$69,400	$86,500
Accounts receivable	85,400	63,625
Inventory	295,156	264,800
Prepaid expenses	1,340	2,155
Total current assets	451,296	417,080
Equipment	144,500	121,000
Accum. depreciation—Equipment	(43,125)	(52,500)
Total assets	$552,671	$485,580
Liabilitiesand Equity
Accounts payable	$66,141	$134,175
Short-term notes payable	13,900	8,600
Total current liabilities	80,041	142,775
Long-term notes payable	58,500	61,750
Total liabilities	138,541	204,525
Equity
Common stock, $5 par value	188,750	163,250
Paid-in capital in excess of par, common stock	50,500	0
Retained earnings	174,880	117,805
Total liabilities and equity	$552,671	$485,580

FORTEN COMPANY
Income Statement
For Year Ended December 31, 2017

Sales		$647,500
Costof goods sold		298,000
Gross profit		349,500
Operating expenses
Depreciation expense	$33,750
Other expenses	145,400	179,150
Other gains (losses)
Losson sale of equipment		(18,125)
Income before taxes		152,225
Income taxes expense		42,450
Netincome		$109,775

Answer & Explanation Solved by verified expert

3.6 Ratings (577 Votes)

FORTEN COMPANY Statement of Cash Flows For Year Ended December 31 2017 Cash flows from operating activities Net Income 109775 Adjustments to reconcile net income to net cash provided See Answer

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In: AccountingForten Company, a merchandiser, recently completed itscalendar-year 2017 operations. For the year, (1) all sales...Forten Company, a merchandiser, recently completed itscalendar-year 2017 operations. For the year, (1) all sales arecredit sales, (2) all credits to Accounts Receivable reflect cashreceipts from customers, (3) all purchases of inventory are oncredit, (4) all debits to Accounts Payable reflect cash paymentsfor inventory, and (5) Other Expenses are paid in advance and areinitially debited to Prepaid Expenses. The company’s incomestatement and balance sheets follow.FORTEN COMPANYComparative Balance SheetsDecember 31, 2017 and 201620172016AssetsCash$69,400$86,500Accounts receivable85,40063,625Inventory295,156264,800Prepaid expenses1,3402,155Total current assets451,296417,080Equipment144,500121,000Accum. depreciation—Equipment(43,125)(52,500)Total assets$552,671$485,580Liabilitiesand EquityAccounts payable$66,141$134,175Short-term notes payable13,9008,600Total current liabilities80,041142,775Long-term notes payable58,50061,750Total liabilities138,541204,525EquityCommon stock, $5 par value188,750163,250Paid-in capital in excess of par, common stock50,5000Retained earnings174,880117,805Total liabilities and equity$552,671$485,580 FORTEN COMPANYIncome StatementFor Year Ended December 31, 2017Sales$647,500Costof goods sold298,000Gross profit349,500Operating expensesDepreciation expense$33,750Other expenses145,400179,150Other gains (losses)Losson sale of equipment(18,125)Income before taxes152,225Income taxes expense42,450Netincome$109,775Additional Information on Year 2017 TransactionsThe loss on the cash sale of equipment was $18,125 (details inb).Sold equipment costing $85,875, with accumulated depreciation of$43,125, for $24,625 cash.Purchased equipment costing $109,375 by paying $56,000 cash andsigning a long-term note payable for the balance.Borrowed $5,300 cash by signing a short-term note payable.Paid $56,625 cash to reduce the long-term notes payable.Issued 3,800 shares of common stock for $20 cash per share.Declared and paid cash dividends of $52,700.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 minussign.)