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 Prior Year Current Year Assets $ 78,400 Cash 92,500 69,625 270,800 2,275 Accounts receivable 94,460 304,156 1,400 Inventory Prepaid expenses Total current assets 478,416 138, 500 (46,125) 570, 791 435,200 127,000 (55,500) Equipment Accum. depreciation-Equipment 506,700 Total assets Liabilities and Equity Accounts payable Short-term notes payable $143,175 9,800 72,141 15,700 87,841 55,500 Total current liabilities 152,975 67,750 Long-term notes payable Total liabilities 143,341 220,725 Equity Common stock, $5 par value Paid-in capital in excess of par, common stock Retained earnings 191,250 66,000 170, 200 169,250 116,725 570, 791 Total liabilities and equity 506,700

Answer 1

Cash Flow Statement
Indirect Method
Cash Flow from Operating Activities
Net Income		$        107,375
Adjustments
Depreciation	$        39,750
Loss on Sale of Equipment	$        24,125
Changes in Current Assets/ Current Liabilities
Increase in Accounts Receivable	$      -24,835			=69625-94460
Increase in inventory	$      -33,356			=270800-304156
Decrease in Prepaid Rent	$              875			=2275-1400
Decrease in Accounts Payable	$      -71,034			=72141-143175
Total Adjustments		$        -64,475
Cash from Operating Activities			$         42,900
Cash flow from Investing Activities
Cash paid for Purchase of Equipment		$        -68,000
Sale of Equipment		$          30,625
Net cash used In investing activities			$       -37,375
Cash flow from Financing Activities
Issue of Common Stock		$          88,000		=4400*20
Borrowed Loan by Short term note		$            5,900
Repayment of Long term notes		$        -59,625
Dividend Paid		$        -53,900
Net cash used in financing activities			$       -19,625
Increase in Cash			$       -14,100
Opening Balance of Cash			$         92,500
Closing Balance of Cash			$         78,400

	Dec 31, Prior Year	Debit	Credit	Dec 31, Current Year
Balance Sheet-Debit
Cash	$       92,500		$         14,100	$           78,400
Accounts Receivable	$       69,625	$          24,835		$           94,460
Inventory	$     270,800	$          33,356		$         304,156
Prepaid Expenses	$          2,275		$               875	$             1,400
Equipment	$     127,000	$        115,375	$       103,875	$         138,500
	$     562,200			$         616,916
Balance Sheet-Credit
Accumulated Depreciation	$       55,500	$          49,125	$         39,750	$           46,125
Accounts Payable	$     143,175	$          71,034		$           72,141
Short term notes payable	$          9,800		$           5,900	$           15,700
Long term notes payable	$       67,750	$          59,625	$         47,375	$           55,500
Common Stock	$     169,250		$         22,000	$         191,250
Paid in Capital in excess of par value	$                 -		$         66,000	$           66,000
Retained Earnings	$     116,725	$          53,900	$       107,375	$         170,200
	$     562,200			$         616,916