70.2K

Verified Solution

Link Copied!

Required information Forten Company, a merchandiser, recently completed its calendar-year 2017 operations. For the year, () 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 company's income statement and balance sheets follow. FORTEN COMPANY Comparative Balance Sheets December 31, 2017 and 2016 2017 2016 Assets Cash 55,900 71,810 281,656 77,500 54,625 255,800 1,975 389,900 112,000 (48,000) Accounts receivable Inventory Prepaid expenses 1,250 410,616 Total current assets Equipment Accum. depreciation-Equipment 153,500 (38,625) 453,900 Total assets 525,491 Liabilities and Equity Accounts payable Short-term notes payable 120,675 6,800 57,141 11,200 68,341 Total current liabilities 127,475 52,750 180,225 Long-term notes payable 63,000 Total liabilities 131,341 Equity Common stock, $5 par value Paid-in capital in excess of par, common stock Retained earnings 170,750 154,250 0 41,500 181,900 119,425 453,900 Total liabilities and equity S 525,491 Prev 13 of 13 co FORTEN COMPANY Income Statement For Year Ended December 31, 2017 602,50 Sales Cost of goods sold Gross profit Operating expenses Depreciation expense 289,000 313,500 24,750 136,400 161,150 Other expenses other gains (losses) Loss on sale of equipment (9,125) 143,225 Income before taxes Income taxes expense 29,850 $ 113,37 Net income 5 Additional Information on Year 2017 Transactions a. The loss on the cash sale of equipment was $9,125 (details in b) b. Sold equipment costing $58,875, with accumulated depreciation of $34,125, for $15,625 cash c. Purchased equipment costing $100,375 by paying $38,000 cash and signing a long-term note payable for the balance. d. Borrowed $4,400 cash by signing a short-term note payable. e. Paid $52,125 cash to reduce the long-term notes payable. f. Issued 2,900 shares of common stock for $20 cash per share. g. Declared and paid cash dividends of $50,900. FORTEN COMPANY Statement of Cash Flows For Year Ended December 31, 2017 Cash flows from operating activities Cash received from customers 585,315 Cash paid for inventory (326,678) Cash paid for other expenses (24,025) Cash paid for income taxes (29,850) $ Net cash provided by operating activities 204,762 Cash flows from investing activities Cash received from sale of equipment Cash paid for equipment Net cash used in investing activities 0 Cash flows from financing activities Cash borrowed on short-term note 4,400 (10,250) Cash paid on long-term note Cash received from issuing stock (16,500) Cash paid for dividends Not cach iicad in financina activities (22 350V

Answer & Explanation Solved by verified expert

See Answer