Forten Company's current year income statement, comparative balance sheets, and additional information follow. For the...
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Accounting
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
Income Statement
For Current Year Ended December 31
Sales
$ 657,500
Cost of goods sold
300,000
Gross profit
357,500
Operating expenses (excluding depreciation)
$ 147,400
Depreciation expense
35,750
183,150
Other gains (losses)
Loss on sale of equipment
(20,125)
Income before taxes
154,225
Income taxes expense
45,250
Net income
$ 108,975
FORTEN COMPANY
Comparative Balance Sheets
December 31
Current Year
Prior Year
Assets
Cash
$ 72,400
$ 88,500
Accounts receivable
88,420
65,625
Inventory
298,156
266,800
Prepaid expenses
1,360
2,195
Total current assets
460,336
423,120
Equipment
142,500
123,000
Accumulated depreciationEquipment
(44,125)
(53,500)
Total assets
$ 558,711
$ 492,620
Liabilities and Equity
Accounts payable
$ 68,141
$ 137,175
Long-term notes payable
72,000
72,750
Total liabilities
140,141
209,925
Equity
Common stock, $5 par value
185,250
165,250
Paid-in capital in excess of par, common stock
60,000
0
Retained earnings
173,320
117,445
Total liabilities and equity
$ 558,711
$ 492,620
Additional Information on Current Year Transactions
The loss on the cash sale of equipment was $20,125 (details in b).
Sold equipment costing $91,875, with accumulated depreciation of $45,125, for $26,625 cash.
Purchased equipment costing $111,375 by paying $60,000 cash and signing a long-term notes payable for the balance.
Paid $52,125 cash to reduce the long-term notes payable.
Issued 4,000 shares of common stock for $20 cash per share.
Declared and paid cash dividends of $53,100.
FORTEN COMPANY
Spreadsheet for Statement of Cash Flows
For Current Year Ended December 31
December 31, Prior Year
Analysis of Changes
December 31, Current Year
Debit
Credit
Balance sheetdebit
Cash
$88,500
not attempted
not attempted
$72,400
Accounts receivable
65,625
not attempted
not attempted
Inventory
266,800
not attempted
not attempted
Prepaid expenses
2,195
not attempted
not attempted
Equipment
123,000
not attempted
not attempted
$546,120
$72,400
Balance sheetcredit
Accumulated depreciationEquipment
$53,500
not attempted
not attempted
Accounts payable
137,175
not attempted
not attempted
Long-term notes payable
72,750
not attempted
not attempted
Common stock, $5 par value
165,250
not attempted
not attempted
Paid-in capital in excess of par value, common stock
0
not attempted
not attempted
Retained earnings
117,445
not attempted
not attempted
$546,120
$0
Statement of cash flows
Operating activities
not attempted
not attempted
not attempted
not attempted
not attempted
not attempted
not attempted
not attempted
not attempted
not attempted
not attempted
not attempted
not attempted
not attempted
not attempted
not attempted
not attempted
not attempted
not attempted
not attempted
not attempted
not attempted
not attempted
not attempted
not attempted
not attempted
not attempted
not attempted
not attempted
not attempted
not attempted
not attempted
Investing activities
not attempted
not attempted
not attempted
not attempted
not attempted
not attempted
not attempted
not attempted
not attempted
not attempted
not attempted
not attempted
Financing activities
not attempted
not attempted
not attempted
not attempted
not attempted
not attempted
not attempted
not attempted
not attempted
not attempted
not attempted
not attempted
not attempted
not attempted
not attempted
not attempted
Non cash investing and financing activities
Purchase of equipment financed by long-term notes payable
not attempted
not attempted
$0
$0
Answer & Explanation
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