Cougar Plastics Company has been operating for three years. At December 31 of last year, the accounting records reflected the following:
Cash $ 28,000 Accounts payable $ 20,000 Investments (short-term) 2,000 Accrued liabilities payable 3,400 Accounts receivable 3,200 Notes payable (short-term) 6,200 Inventory 29,000 Notes payable (long-term) 45,000 Notes receivable (long-term) 2,500 Common stock 10,600 Equipment 51,000 Additional paid-in capital 95,400 Factory building 104,000 Retained earnings 43,600 Intangibles 4,500
During the current year, the company had the following summarized activities:
Purchased short-term investments for $7,300 cash.
Lent $5,400 to a supplier who signed a two-year note.
Purchased equipment that cost $25,000; paid $4,300 cash and signed a one-year note for the balance.
Hired a new president at the end of the year. The contract was for $84,000 per year plus options to purchase company stock at a set price based on company performance.
Issued an additional 2,500 shares of $0.50 par value common stock for $16,000 cash.
Borrowed $11,000 cash from a local bank, payable in three months.
Purchased a patent (an intangible asset) for $1,600 cash.
Built an addition to the factory for $25,000; paid $8,700 in cash and signed a three-year note for the balance.
Returned defective equipment to the manufacturer, receiving a cash refund of $1,800.
5. Prepare a classified balance sheet at December 31 of the current year.
COUGAR PLASTICS COMPANY Balance Sheet Assets Liabilities 0 0 0 Stockholders' Equity 0 0 $0 $0
Cougar Plastics Company has been operating for three years. At December 31 of last year, the accounting records reflected the following:
| Cash | $ | 28,000 | Accounts payable | $ | 20,000 | |
| Investments (short-term) | 2,000 | Accrued liabilities payable | 3,400 | |||
| Accounts receivable | 3,200 | Notes payable (short-term) | 6,200 | |||
| Inventory | 29,000 | Notes payable (long-term) | 45,000 | |||
| Notes receivable (long-term) | 2,500 | Common stock | 10,600 | |||
| Equipment | 51,000 | Additional paid-in capital | 95,400 | |||
| Factory building | 104,000 | Retained earnings | 43,600 | |||
| Intangibles | 4,500 | |||||
During the current year, the company had the following summarized activities:
Purchased short-term investments for $7,300 cash.
Lent $5,400 to a supplier who signed a two-year note.
Purchased equipment that cost $25,000; paid $4,300 cash and signed a one-year note for the balance.
Hired a new president at the end of the year. The contract was for $84,000 per year plus options to purchase company stock at a set price based on company performance.
Issued an additional 2,500 shares of $0.50 par value common stock for $16,000 cash.
Borrowed $11,000 cash from a local bank, payable in three months.
Purchased a patent (an intangible asset) for $1,600 cash.
Built an addition to the factory for $25,000; paid $8,700 in cash and signed a three-year note for the balance.
Returned defective equipment to the manufacturer, receiving a cash refund of $1,800.
5. Prepare a classified balance sheet at December 31 of the current year.
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Related questions
Forten Company, a merchandiser, recently completed itscalendar-year 2015 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, 2015 and 2014 | ||||||
2015 | 2014 | |||||
| Assets | ||||||
| Cash | $ | 49,800 | $ | 74,000 | ||
| Accounts receivable | 65,900 | 59,000 | ||||
| Inventory | 277,000 | 252,500 | ||||
| Prepaid expenses | 1,500 | 1,700 | ||||
| Total current assets | 394,200 | 387,200 | ||||
| Equipment | 158,500 | 106,500 | ||||
| Accum. depreciationâEquipment | (36,375) | (46,000) | ||||
| Total assets | $ | 516,325 | $ | 447,700 | ||
| Liabilities and Equity | ||||||
| Accounts payable | $ | 54,325 | $ | 113,000 | ||
| Short-term notes payable | 9,000 | 8,000 | ||||
| Total current liabilities | 63,325 | 121,000 | ||||
| Long-term notes payable | 65,000 | 48,000 | ||||
| Total liabilities | 128,325 | 169,000 | ||||
| Equity | ||||||
| Common stock, $5 par value | 162,500 | 150,750 | ||||
| Paid-in capital in excess of par, common stock | 35,250 | 0 | ||||
| Retained earnings | 190,250 | 127,950 | ||||
| Total liabilities and equity | $ | 516,325 | $ | 447,700 | ||
| FORTEN COMPANY Income Statement For Year Ended December 31, 2015 | |||||
| Sales | $ | 582,500 | |||
| Costof goods sold | 287,000 | ||||
| Gross profit | 295,500 | ||||
| Operating expenses | |||||
| Depreciation expense | $ | 20,000 | |||
| Other expenses | 132,000 | 152,000 | |||
| Other gains (losses) | |||||
| Loss on sale ofequipment | (5,250) | ||||
| Income before taxes | 138,250 | ||||
| Income taxes expense | 24,250 | ||||
| Netincome | $ | 114,000 | |||
| Additional Information on Year 2015Transactions |
| a. | Net income was$114,000. |
| b. | Accountsreceivable increased. |
| c. | Inventoryincreased. |
| d. | Prepaid expensesdecreased. |
| e. | Accounts payabledecreased. |
| f. | Depreciationexpense was $20,000. |
| g. | Sold equipment costing $46,500, with accumulated depreciation of$29,625, for $11,625 cash. This yielded a loss of $5,250. |
| h. | Purchased equipment costing $98,500 by paying $25,000 cash and(i.) by signing a long-term note payable for thebalance. |
| j. | Borrowed $1,000cash by signing a short-term note payable. |
| k. | Paid $56,500cash to reduce the long-term notes payable. |
| l. | Issued 2,350shares of common stock for $20 cash per share. |
| m. | Declared andpaid cash dividends of $51,700. |
| Required: |
Prepare a complete statement of cash flows using a spreadsheet;report its operating activities using the indirect method.(Enter all amounts as positive values.) |
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