Question

Forten Company's current year income statement, comparative balance sheets, and additional information follow. 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.

FORTEN COMPANY Comparative Balance Sheets December 31
	Current Year						Prior Year
Assets
Cash		$	60,400					$	80,500
Accounts receivable			76,340						57,625
Inventory			286,156						258,800
Prepaid expenses			1,280						2,035
Total current assets			424,176						398,960
Equipment			150,500						115,000
Accum. depreciation—Equipment			(40,125	)					(49,500	)
Total assets		$	534,551					$	464,460
Liabilities and Equity
Accounts payable		$	60,141					$	125,175
Short-term notes payable			12,100						7,400
Total current liabilities			72,241						132,575
Long-term notes payable			61,500						55,750
Total liabilities			133,741						188,325
Equity
Common stock, $5 par value			173,250						157,250
Paid-in capital in excess of par, common stock			48,000						0
Retained earnings			179,560						118,885
Total liabilities and equity		$	534,551					$	464,460
FORTEN COMPANY Income Statement For Current Year Ended December 31 Sales $ 617,500 Cost of goods sold 292,000 Gross profit 325,500 Operating expenses Depreciation expense $ 27,750 Other expenses 139,400 167,150 Other gains (losses) Loss on sale of equipment (12,125 ) Income before taxes 146,225 Income taxes expense 34,050 Net income $ 112,175 Additional Information on Current Year Transactions The loss on the cash sale of equipment was $12,125 (details in b). Sold equipment costing $67,875, with accumulated depreciation of $37,125, for $18,625 cash. Purchased equipment costing $103,375 by paying $44,000 cash and signing a long-term note payable for the balance. Borrowed $4,700 cash by signing a short-term note payable. Paid $53,625 cash to reduce the long-term notes payable. Issued 3,200 shares of common stock for $20 cash per share. Declared and paid cash dividends of $51,500. Problem 16-4AA Indirect: Cash flows spreadsheet LO P4 Required: Prepare a complete statement of cash flows using a spreadsheet using the indirect method. (Enter all amounts as positive values.)

Answer 1

	Prior Year	Debit	Credit	Current Year
Balance Sheet-Debit
Cash	$       80,500			$       60,400
Accounts Receivable	$       57,625	$       18,715		$       76,340
Inventory	$     258,800	$       27,356		$     286,156
Prepaid Expenses	$         2,035		$            755	$         1,280
Equipment	$     115,000	$     103,375	$       67,875	$     150,500
	$     513,960			$     574,676
Balance sheet-Credit
Accumulated Depreciation	$       49,500	$       37,125	$       27,750	$       40,125
Accounts Payable	$     125,175	$       65,034		$       60,141
Short term Notes Payable	$         7,400		$         4,700	$       12,100
Long term Notes Payable	$       55,750	$       53,625	$       59,375	$       61,500
Common Stock	$     157,250		$       16,000	$     173,250
Paid in capital in excess of par	$                -		$       48,000	$       48,000
Retained Earnings	$     118,885	$       51,500	$     112,175	$     179,560
	$     513,960			$     574,676
Cash Flow Statement
Indirect Method
Cash flow from Operating Activities
Net Income	$     112,175
Increase in Accounts Receivable		$       18,715
Increase in Inventory		$       27,356
Decrease in Prepaid Expenses	$            755
Decrease in Accounts payable		$       65,034
Loss on sale of equipment	$         7,125
Depreciation	$       27,750
Cash flow from Investing Activities
Purchase of Equipment		$       34,000
Sale of Equipment	$       13,625
Cash flow from Financing Activities
Borrowed on short term note	$         4,700
Repayment of Long term notes		$       53,625
Issuance of Common Stock	$       64,000
Payment of cash dividends		$       51,500
Totals	$    230,130	$    250,230
Net Decrease in cash		$     (20,100)
Totals	$     230,130	$     230,130
Non Cash Investing and Financing Activity
Issued long term note for equipment	$       59,375

Cash Flow Statement
Indirect Method
Cash flow from Operating Activities
Net Income		112,175
Adjustments
Depreciation	27,750
Loss on sale of investment	12,125
Increase in Accounts Receivable	(18,715)
Increase in Inventory	(27,356)
Decrease in Prepaid Expenses	755
Decrease in Accounts payable	(65,034)
Total Adjustments		(70,475)
Net Cash from operating activities			41,700
Cash flow from Investing Activities
Sale of Equipment		18,625
Cash paid for Purchase of Equipment		(44,000)
Net Cash used in investing activities			(25,375)
Cash flow from Financing Activities		ekkarill92 Next > < Previous Related Solutions Forten Company's current year income statement, comparative balance sheets, and additional information follow. Forten Company's current year income statement, comparative balance sheets, and additional information follow. 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. FORTEN COMPANYComparative Balance SheetsDecember 31   Current Year   Prior Year Assets  ... Forten Company's current year income statement, comparative balance sheets, and additional information follow. Forten Company's current year income statement, comparative balance sheets, and additional information follow. 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