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Forten Company, a merchandiser, recently completed its calendar-year 2017 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 company’s income statement and balance sheets follow.

FORTEN COMPANY Comparative Balance Sheets December 31, 2017 and 2016
	2017				2016
Assets
Cash	$	49,800			$	73,500
Accounts receivable		65,810				50,625
Inventory		275,656				251,800
Prepaid expenses		1,250				1,875
Total current assets		392,516				377,800
Equipment		157,500				108,000
Accum. depreciation—Equipment		(36,625	)			(46,000	)
Total assets	$	513,391			$	439,800
Liabilities and Equity
Accounts payable	$	53,141			$	114,675
Short-term notes payable		10,000				6,000
Total current liabilities		63,141				120,675
Long-term notes payable		65,000				48,750
Total liabilities		128,141				169,425
Equity
Common stock, $5 par value		162,750				150,250
Paid-in capital in excess of par, common stock		37,500				0
Retained earnings		185,000				120,125
Total liabilities and equity	$	513,391			$	439,800

  

FORTEN COMPANY Income Statement For Year Ended December 31, 2017
Sales				$	582,500
Cost of goods sold					285,000
Gross profit					297,500
Operating expenses
Depreciation expense	$	20,750
Other expenses		132,400			153,150
Other gains (losses)
Loss on sale of equipment					(5,125	)
Income before taxes					139,225
Income taxes expense					24,250
Net income				$	114,975

Additional Information on Year 2017 Transactions

1. Net income was $114,975.
2. Accounts receivable increased.
3. Inventory increased.
4. Prepaid expenses decreased.
5. Accounts payable decreased.
6. Depreciation expense was $20,750.
7. Sold equipment costing $46,875, with accumulated depreciation of $30,125, for $11,625 cash. This yielded a loss of $5,125.
8. Purchased equipment costing $96,375 by paying $30,000 cash and (i.) by signing a long-term note payable for the balance.
9. Borrowed $4,000 cash by signing a short-term note payable.
10. Paid $50,125 cash to reduce the long-term notes payable.
11. Issued 2,500 shares of common stock for $20 cash per share.
12. Declared and paid cash dividends of $50,100.

  
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.)

FORTEN COMPANYSpreadsheet for Statement of Cash FlowsFor Year Ended December 31, 2017Analysis of ChangesDecember 31, 2016DebitCreditDecember 31, 2017Balance sheet—debitCash$73,500$49,800Accounts receivable50,625Inventory251,800Prepaid expenses1,875Equipment108,000$485,800$49,800Balance sheet—creditAccumulated depreciation—Equipment$46,000Accounts payable114,675Short-term notes payable6,000Long-term notes payable48,750Common stock, $5 par value150,250Paid-in capital in excess of par value, common stock0Retained earnings120,125$485,800$0Statement of cash flowsOperating activitiesInvesting activities Financing activitiesNon cash investing and financing activitiesPurchase of equipment financed by long-term note payable$0$0

Answer 1

Statement of cash flow
Cash flows from operating activities
net income					114,975
Adjustments to reconcile net income to net
cash provided by operations:
Depreciation expense					20,750
loss on sale of Equipment					5,125
increase in account receivable					-15185
increase in inventory					-23856
Decrease in prepaid expense					625
Decrease in accounts payable					-61534
net cash provided by operating activities						40,900
Cash from investing activities
cash from sale of Equipment					11,625
cash for purchase of Equipment					-30000
Cash used fro investing activities						-18,375
Cash from financing activities
Cash from short term notes payable					4,000
Cash paid for long term notes payable					-50,125
Cash from stock issue					50000
paid cash dividend					-50,100
Cash used for financing activity						-46,225
Net decrease in cash						-23,700
Cash at the beginning og the year						73500
Cash at year end						49,800
non cash financing and investing activity
purchase of equipment financed by long term notes payable						66375