Question

FORTEN COMPANY Income Statement For Year Ended December 31, 2017 $647,500 298,000 349,500 Sales Cost of goods sold Gross profit Operating expenses Depreciation expense Other expenses Other gains (losses) Loss on sale of equipment Income before taxes Income taxes expense Net income $33,750 145,400 179,150 (18,125) 152,225 42,450 $109,775 Additional Information on Year 2017 Transactions a. The loss on the cash sale of equipment was $18,125 (details in b). b. Sold equipment costing $85,875, with accumulated depreciation of $43,125, for $24,625 cash. C. Purchased equipment costing $109,375 by paying $56,000 cash and signing a long-term note payable for the balance. d. Borrowed $5,300 cash by signing a short-term note payable. e. Paid $56,625 cash to reduce the long-term notes payable. f. Issued 3,800 shares of common stock for $20 cash per share. g. Declared and paid cash dividends of $52,700. Required: 1. Prepare a complete statement of cash flows, report its operating activities using the indirect method. (Amounts to be deducted should be indicated with a minus sign.)

Answer 1

FORTEN COMPANY
Statement of Cash flows
Year Ended December 31, 2017
Cash flows from Operating activities:
Net income		1,09,775
Adjustments to reconcile net income to net cash provided by operating activities :
Depreciation	33,750
Loss on sale of equipment	18,125
Increase in Short term note payable	5,300
		57,175
Net cash provided by operating activities		1,66,950
Cash flow form Investing activities
Sale of equipment for cash	24,625
Purchase of equipment for cash	-56,000
Net cash used for investing activities		-31,375
Cash flow from Financing Activities
Issuance of Common stock for cash	76,000
Payment of cash dividends	-52,700
Net cash provided by financing activities		23,300