60.1K

Verified Solution

Link Copied!

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 Recevable 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 Comparative Balance Sheets December 31 Current Year Prior Year $ 69,480 85,480 295, 156 1,340 451,296 144,500 (43,125) $ 552,671 $ 86, 580 63,625 264,800 2,155 417,080 121, eee (52,580) $ 485,580 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 Common stock, $5 par value Paid-in capital in excess of par, common stock Retained earnings Total liabilities and equity $ 66,141 13,980 88, 041 58,500 138,541 $ 134,175 8,689 142,775 61,750 284,525 182,250 57,000 174,880 $ 552,671 163,250 9 117,805 $ 485, 580 $ 647, 580 298,00 349,580 FORTEN COMPANY Income Statement For Current Year Ended December 31 Sales Cost of goods sold Gross profit Operating expenses Depreciation expense $ 33,750 Other expenses 145,480 Other gains (losses) Loss on sale of equipment Income before taxes Income taxes expense Net income 179,150 (18,125) 152,225 42,450 $ 109,775 Additional Information on Current Year Transactions a. The loss on the cash sale of equipment was $18,125 (details in b). b. Sold equipment costing $85,875, with accumulated depreciation of $43,125, for $24,625 cash. c. Purchased equipment costing $109,375 by paying $56,000 cash and signing a long-term note payable for the balance. d. Borrowed $5,300 cash by signing a short-term note payable. e. Pald $56,625 cash to reduce the long-term notes payable. f. Issued 3,800 shares of common stock for $20 cash per share. g. Declared and pald cash dividends of $52,700. 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 Adjustments to reconcile net income to net cash provided by operations: Cash flows from investing activities Cash flows from financing activities: Net increase (decrease) in cash Cash balance at December 31. prior year Cash balance at December 31, current year

Answer & Explanation Solved by verified expert

See Answer