Question

Use the following information for the Problems below.

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.
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FORTEN COMPANY Comparative Balance Sheets December 31, 2017 and 2016
	2017				2016
Assets
Cash	$	51,400			$	74,500
Accounts receivable		67,310				51,625
Inventory		277,156				252,800
Prepaid expenses		1,300				2,025
Total current assets		397,166				380,950
Equipment		156,500				109,000
Accum. depreciation—Equipment		(37,125	)			(46,500	)
Total assets	$	516,541			$	443,450
Liabilities and Equity
Accounts payable	$	54,141			$	116,175
Short-term notes payable		10,300				6,200
Total current liabilities		64,441				122,375
Long-term notes payable		64,500				49,750
Total liabilities		128,941				172,125
Equity
Common stock, $5 par value		164,750				151,250
Paid-in capital in excess of par, common stock		38,500				0
Retained earnings		184,350				120,075
Total liabilities and equity	$	516,541			$	443,450

  

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FORTEN COMPANY Income Statement For Year Ended December 31, 2017
Sales				$	587,500
Cost of goods sold					286,000
Gross profit					301,500
Operating expenses
Depreciation expense	$	21,750
Other expenses		133,400			155,150
Other gains (losses)
Loss on sale of equipment					(6,125	)
Income before taxes					140,225
Income taxes expense					25,650
Net income				$	114,575
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Additional Information on Year 2017 Transactions

a.      The loss on the cash sale of equipment was $6,125 (details in b).

b.      Sold equipment costing $49,875, with accumulated depreciation of $31,125, for $12,625 cash.

c.       Purchased equipment costing $97,375 by paying $32,000 cash and signing a long-term note payable for the balance.

d.      Borrowed $4,100 cash by signing a short-term note payable.

e.      Paid $50,625 cash to reduce the long-term notes payable.

f.        Issued 2,600 shares of common stock for $20 cash per share.

g.      Declared and paid cash dividends of $50,300.

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Required:
Prepare a complete statement of cash flows; report its operating activities according to the direct method. (Amounts to be deducted should be indicated with a minus sign.)

	FORTEN COMPANY Statement of Cash Flows For Year Ended December 31, 2017 Cash flows from operating activities $0 Cash flows from investing activities 0 Cash flows from financing activities 0 Net increase (decrease) in cash $0 Cash balance at beginning of year Cash balance at end of year $0

all options to input

Cash borrowed on short-term note

Cash paid for dividends

Cash paid for equipment

Cash paid for income taxes

Cash paid for inventory

Cash paid for other expenses

Cash paid on long-term note

Cash received from customers

Cash received from issuing stock

Cash received from sale of equipment

Decrease in accounts payable

Decrease in accounts receivable

Decrease in merchandise inventory

Decrease in prepaid expenses

Depreciation expense

Increase in accounts payable

Increase in accounts receivable

Increase in merchandise inventory

Increase in prepaid expenses

Loss on sale of equipment

Net income

Answer 1

		Cash flow from operating activities
(a)
			Amt in $
Cash Received from customers	Wn-1		571815
Cash Received from short term note	Wn-2		4100
Payment to suppliers	Wn-3		-372390
Payment for other expenses	Wn-4		-132675
Payment for Income Tax			-25650
Cash flow from operating activities			45200
(b)		Cash flow from Investing activities
sale of equipment			12625
Purchase of equipment			-32000
Cash flow from Investing activities			-19375
		Cash flow from Financing activities
(c)
Repayment of long term debt			-50625
Issue of stock			52000
Dividend Paid			-50300
Cash outflow fromFinancing activities			-48925
Net increase/ decrease in cash and cash eq			-23100
For the year (a+b+c)
Add: Opening Cash			74500
Closing cash			51400

		WN-1
	Accounts Recievable A/c
Particulars	Amt	Particulars	Amt
To Bal B/d	51625	By cash Paid (bal fig)	571815
To Sales	587500
		By bal c/f	67310
		WN-2
	Short Term Payable A/c
Particulars	Amt	Particulars	Amt
		By Bal B/d	6200
		By Cash	4100
To bal c/f	10300
		WN-3
	Accounts Payable A/c
Particulars	Amt	Particulars	Amt
To Cash Paid	372390	By Bal B/d	116175
(bal fig)		By purchases*	310356
To bal c/f	54141
* Purchases =	Closing Inventory      +	Cost of goods sold   -	Opening Inventory
	277156     +	286000            -	252800
	310356
		WN-4
	Prepaid Expenses A/c
Particulars	Amt	Particulars	Amt
To bal B/d	2025	By Expenses	133400
To Cash Paid	132675
bal fig
		By Bal c/d	1300