Question

Required information (The following information applies to the questions displayed below. 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 $ 57,400 73,320 283, 156 1,260 415, 136 152,500 (39, 125) $528,511 $ 78,500 55,625 256,800 1,995 392,920 113,000 (48,500) $457,420 Assets Cash Accounts receivable Inventory Prepaid expenses Total current assets Equipment Accum. depreciation-Equipment Total assets Liabilities and Equity Accounts payable Short-term notes payable Total current liabilities Long-term notes payable Total liabilities Equity Common stock, $5 par value Paid-in capital in excess of par, common stock Retained earnings Total liabilities and equity $ 58,141 11,500 69,641 62,500 132, 141 $122, 175 7,000 129, 175 53,750 182,925 155, 250 170,250 45,000 181, 120 $528,511 119, 245 $457, 420
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Answer 1

Forten Company Cashflow Statement - Direct method 589,805 Cash flows from Operating Activities Cash collections from customers Cash payments Cash paid to suppliers for Inventory Cash paid for operating expenses Cash paid for Income Taxes Total cash payments Net Cash Provided/(Used) by Operating Activities (380,390) (136,665) (31,250) (548,305) 41,500 Cash flows from Investing Activities Receipt from sale of equipment Payment to purchase equipment Net Cash Provided/(Used) by Investing Activities 16,625 (40,000) (23,375) Cash flows from Financing Activities Borrowed on short term Payment on long term Issued common stock for cash Payment of cash Dividends Net Cash Provided/(Used) by Financing Activities Net increase (decrease) in Cash Cash balance at Beginning of Year Cash balance at End of Year 4,500 (52,625) 60,000 (51,100) =3,000*20 (39,225) (21,100) 78,500 57,400

Workings Cashflow Statement - Direct method Cash flows from from Operating Activities Sales Opening Accounts Receivable Closing Accounts Receivable Cash collections from customers 607,500 55,625 (73,320) 589,805 Cash payments Cost of sales Opening Accounts Payable Closing Accounts Payable Closing Inventory Opening Inventory Cash paid to Suppliers 290,000 122,175 (58,141) 283,156 (256,800) 380,390 Operating other expenses Closing Prepaid expenses Opening Prepaid expenses Cash paid for operating expenses 137,400 1,260 (1,995) 136,665 31,250 Cash paid for Income tax Total Cash Payments Net Cash Provided/(Used) by Operating Activities 548,305 41,500