70.2K

Verified Solution

Link Copied!

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		$	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. depreciationEquipment			(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 Current Year Ended December 31
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 Current Year Transactions

1. The loss on the cash sale of equipment was $5,125 (details in b).
2. Sold equipment costing $46,875, with accumulated depreciation of $30,125, for $11,625 cash.
3. Purchased equipment costing $96,375 by paying $30,000 cash and signing a long-term note payable for the balance.
4. Borrowed $4,000 cash by signing a short-term note payable.
5. Paid $50,125 cash to reduce the long-term notes payable.
6. Issued 2,500 shares of common stock for $20 cash per share.
7. Declared and paid cash dividends of $50,100.

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 is not complete. FORTEN COMPANY Spreadsheet for Statement of Cash Flows For Current Year Ended December 31 Analysis of Changes December 31, Credit Debit Prior Year December 31, Current Year $ 23,700 $ 73,500 50,625 Balance sheetdebit Cash Accounts receivable Inventory Prepaid expenses Equipment 15,185 23,856 49,800 65,810 275,656 1,250 157,500 550,016 251,800 1,875 108,000 485,800 625 49,500 X $ $ $ 46,000 $ 20,750 66,750 61,534 Balance sheet-credit Accumulated depreciation Equipment Accounts payable Short-term notes payable Long-term notes payable Common stock, $5 par value Paid-in capital in excess of par value, common stock Retained earnings 114,675 6,000 48,750 150,250 0 120,125 485,800 4,000 66,375 12,500 37,500 64,875 X 53,141 10,000 115,125 162,750 37,500 185,000 630,266 $ Statement of cash flows Operating activities Net income 114,975 % I----- ---- ----- --LI- 114,975 X Operating activities Net income Increase in accounts receivable Increase in inventory Decrease in prepaid expenses Decrease in accounts payable Depreciation expense Loss on sale of equipment OOOOOOOOO Investing activities Receipt from sale of equipment Payment to purchase equipment Financing activities Borrowed on short-term note Payment on long-term note Issued common stock for cash Payment of cash dividends Non cash investing and financing activities Purchase of equipment financed by long-term note payable $ 150,075 $ 345,300

Answer & Explanation Solved by verified expert

See Answer