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	$	66,379		$	70,500
Accounts receivable		77,025			59,625
Merchandise inventory		262,156			233,800
Prepaid expenses		1,540			2,025
Equipment		159,425			117,000
Accum. depreciationEquipment		(50,650)			(57,000)
Total assets	$	515,875		$	425,950
Liabilities and Equity
Accounts payable	$	58,375		$	110,750
Short-term notes payable		9,400			5,700
Long-term notes payable		25,825			41,500
Common stock, $5 par value		165,250			149,250
Paid-in capital in excess of par, common stock		48,000			0
Retained earnings		209,025			118,750
Total liabilities and equity	$	515,875		$	425,950

FORTEN COMPANY Income Statement For Year Ended December 31, 2013
Sales				$	627,500
Cost of goods sold					303,000
Gross profit					324,500
Operating expenses
Depreciation expense	$	19,700
Other expenses		128,050			147,750
Other gains (losses)
Loss on sale of equipment					(4,425)
Income before taxes					172,325
Income taxes expense					30,250
Net income				$	142,075

Additional Information on Year 2013 Transactions
a.	The loss on the cash sale of equipment was $4,425 (details in b).
b.	Sold equipment costing $45,425, with accumulated depreciation of $26,050, for $14,950 cash.
c.	Purchased equipment costing $87,850 by paying $60,000 cash and signing a long-term note payable for the balance.
d.	Borrowed $3,700 cash by signing a short-term note payable.
e.	Paid $43,525 cash to reduce the long-term notes payable.
f.	Issued 3,200 shares of common stock for $20 cash per share.
g.	Declared and paid cash dividends of $51,800.

Required:
1.	Prepare a complete statement of cash flows; report its operating activities using the indirect method.