[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 companyâs 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.depreciationâEquipment (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.)
[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 companyâs 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.depreciationâEquipment | (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.) |