Problem 12-1A Indirect: Statement of cash flows LO A1, P1, P2, P3

Forten Company, a merchandiser, recently completed its calendar-year 2013 operations. 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. The companys balance sheets and income statement follow.

FORTEN COMPANY Comparative Balance Sheets December 31, 2013 and 2012
	2013			2012
Assets
Cash	$	54,969		$	69,500
Accounts receivable		75,625			58,625
Merchandise inventory		263,656			235,800
Prepaid expenses		1,500			1,975
Equipment		157,375			115,000
Accum. depreciationEquipment		(48,550)			(55,000)
Total assets	$	504,575		$	425,900
Liabilities and Equity
Accounts payable	$	58,575		$	110,450
Short-term notes payable		9,000			5,500
Long-term notes payable		31,925			40,500
Common stock, $5 par value		163,750			148,750
Paid-in capital in excess of par, common stock		45,000			0
Retained earnings		196,325			120,700
Total liabilities and equity	$	504,575		$	425,900

FORTEN COMPANY Income Statement For Year Ended December 31, 2013
Sales				$	622,500
Cost of goods sold					301,000
Gross profit					321,500
Operating expenses
Depreciation expense	$	19,500
Other expenses		141,250			160,750
Other gains (losses)
Loss on sale of equipment					(4,375)
Income before taxes					156,375
Income taxes expense					29,750
Net income				$	126,625

Additional Information on Year 2013 Transactions
a.	The loss on the cash sale of equipment was $4,375 (details in b).
b.	Sold equipment costing $45,175, with accumulated depreciation of $25,950, for $14,850 cash.
c.	Purchased equipment costing $87,550 by paying $53,000 cash and signing a long-term note payable for the balance.
d.	Borrowed $3,500 cash by signing a short-term note payable.
e.	Paid $43,125 cash to reduce the long-term notes payable.
f.	Issued 3,000 shares of common stock for $20 cash per share.
g.	Declared and paid cash dividends of $51,000.

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 minus sign.)