[The following information applies to the questions displayed below.] Forten Company, a merchandiser, recently completed its calendar-year 2017...

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[The following information applies to the questions displayedbelow.]

Forten Company, a merchandiser, recently completed itscalendar-year 2017 operations. For the year, (1) all sales arecredit sales, (2) all credits to Accounts Receivable reflect cashreceipts from customers, (3) all purchases of inventory are oncredit, (4) all debits to Accounts Payable reflect cash paymentsfor inventory, and (5) Other Expenses are paid in advance and areinitially debited to Prepaid Expenses. The company’s incomestatement and balance sheets follow.
FORTEN COMPANY
Comparative Balance Sheets
December 31, 2017 and 2016
2017 2016
Assets
Cash $ 75,400 $ 90,500
Accounts receivable 91,440 67,625
Inventory 301,156 268,800
Prepaid expenses 1,380 2,235
Total current assets 469,376 429,160
Equipment 140,500 125,000
Accum.depreciation—Equipment (45,125 ) (54,500 )
Total assets $ 564,751 $ 499,660
Liabilities andEquity
Accounts payable $ 70,141 $ 140,175
Short-term notes payable 15,100 9,400
Total current liabilities 85,241 149,575
Long-term notes payable 56,500 65,750
Total liabilities 141,741 215,325
Equity
Common stock, $5 par value 196,750 167,250
Paid-in capital in excess ofpar, common stock 54,500 0
Retained earnings 171,760 117,085
Total liabilities andequity $ 564,751 $ 499,660

FORTEN COMPANY
Income Statement
For Year Ended December 31, 2017
Sales $ 667,500
Cost of goods sold 302,000
Gross profit 365,500
Operating expenses
Depreciation expense $ 37,750
Other expenses 149,400 187,150
Other gains (losses)
Loss on sale of equipment (22,125 )
Income before taxes 156,225
Income taxes expense 48,050
Net income $ 108,175
Additional Information on Year 2017Transactions
The loss on the cash sale of equipment was $22,125 (details inb).
Sold equipment costing $97,875, with accumulated depreciation of$47,125, for $28,625 cash.
Purchased equipment costing $113,375 by paying $64,000 cash andsigning a long-term note payable for the balance.
Borrowed $5,700 cash by signing a short-term note payable.
Paid $58,625 cash to reduce the long-term notes payable.
Issued 4,200 shares of common stock for $20 cash per share.
Declared and paid cash dividends of $53,500.
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 minussign.)

Answer & Explanation Solved by verified expert

3.7 Ratings (332 Votes)

Cash flow Statement:
Cash flows from Operating activities:
Net income for the year	108175
Adjustment required fro reconciliation
Depreciation expense	37750
Loss on sale of equipment	22125
Increase in Accounts receivable	-23815
Increasse in Inventory	-32356
Decrease in Pprepaid expense	855
Decrease in Accounts payable	-70034
Net cash provided from operating activities		42700

Cash flows from Investing activities:
Sale of equipment	28625
Purchase of Equipment	-64000
Net cash used in Investing activities		-35375

Cash flows from Financing activities:
Borrowings from short term note payable	5700
Repayment of long term note payable	-58625
Dividend paid	-53500
Common Stock issued (4200*20)	84000
Net cash used in Financing activities		-22425
Net decrease in cash		-15100
Beginning Balance n cash		90500
Ending Balance in cash		75400

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[The following information applies to the questions displayedbelow.]Forten Company, a merchandiser, recently completed itscalendar-year 2017 operations. For the year, (1) all sales arecredit sales, (2) all credits to Accounts Receivable reflect cashreceipts from customers, (3) all purchases of inventory are oncredit, (4) all debits to Accounts Payable reflect cash paymentsfor inventory, and (5) Other Expenses are paid in advance and areinitially debited to Prepaid Expenses. The company’s incomestatement and balance sheets follow.FORTEN COMPANYComparative Balance SheetsDecember 31, 2017 and 201620172016AssetsCash$75,400$90,500Accounts receivable91,44067,625Inventory301,156268,800Prepaid expenses1,3802,235Total current assets469,376429,160Equipment140,500125,000Accum.depreciation—Equipment(45,125)(54,500)Total assets$564,751$499,660Liabilities andEquityAccounts payable$70,141$140,175Short-term notes payable15,1009,400Total current liabilities85,241149,575Long-term notes payable56,50065,750Total liabilities141,741215,325EquityCommon stock, $5 par value196,750167,250Paid-in capital in excess ofpar, common stock54,5000Retained earnings171,760117,085Total liabilities andequity$564,751$499,660 FORTEN COMPANYIncome StatementFor Year Ended December 31, 2017Sales$667,500Cost of goods sold302,000Gross profit365,500Operating expensesDepreciation expense$37,750Other expenses149,400187,150Other gains (losses)Loss on sale of equipment(22,125)Income before taxes156,225Income taxes expense48,050Net income$108,175Additional Information on Year 2017TransactionsThe loss on the cash sale of equipment was $22,125 (details inb).Sold equipment costing $97,875, with accumulated depreciation of$47,125, for $28,625 cash.Purchased equipment costing $113,375 by paying $64,000 cash andsigning a long-term note payable for the balance.Borrowed $5,700 cash by signing a short-term note payable.Paid $58,625 cash to reduce the long-term notes payable.Issued 4,200 shares of common stock for $20 cash per share.Declared and paid cash dividends of $53,500.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 minussign.)

FORTEN COMPANY Comparative Balance Sheets December 31, 2017 and 2016
	2017			2016
Assets
Cash	$	75,400		$	90,500
Accounts receivable		91,440			67,625
Inventory		301,156			268,800
Prepaid expenses		1,380			2,235
Total current assets		469,376			429,160
Equipment		140,500			125,000
Accum.depreciation—Equipment		(45,125	)		(54,500	)
Total assets	$	564,751		$	499,660
Liabilities andEquity
Accounts payable	$	70,141		$	140,175
Short-term notes payable		15,100			9,400
Total current liabilities		85,241			149,575
Long-term notes payable		56,500			65,750
Total liabilities		141,741			215,325
Equity
Common stock, $5 par value		196,750			167,250
Paid-in capital in excess ofpar, common stock		54,500			0
Retained earnings		171,760			117,085
Total liabilities andequity	$	564,751		$	499,660

FORTEN COMPANY Income Statement For Year Ended December 31, 2017
Sales			$	667,500
Cost of goods sold				302,000
Gross profit				365,500
Operating expenses
Depreciation expense	$	37,750
Other expenses		149,400		187,150
Other gains (losses)
Loss on sale of equipment				(22,125	)
Income before taxes				156,225
Income taxes expense				48,050
Net income			$	108,175
Additional Information on Year 2017Transactions The loss on the cash sale of equipment was $22,125 (details inb). Sold equipment costing $97,875, with accumulated depreciation of$47,125, for $28,625 cash. Purchased equipment costing $113,375 by paying $64,000 cash andsigning a long-term note payable for the balance. Borrowed $5,700 cash by signing a short-term note payable. Paid $58,625 cash to reduce the long-term notes payable. Issued 4,200 shares of common stock for $20 cash per share. Declared and paid cash dividends of $53,500. 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 minussign.)