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. FORTEN COMPANY Comparative Balance Sheets December 31, 2017 and 2016 2017 2016 $ 75,400 $ 90,500 91,440 67,625 301,156 268,800 1,380 2,235 469,376 429,160 140,500 125,000 (45,125) (54,500) $ 564,751 $ 499,660 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 $ 70,141 $ 140,175 15, 100 9,400 85,241 149,575 56,500 65, 750 141,741 215,325 196,750 167,250 54,500 171,760 117,085 $ 564,751 $ 499,660

Answer 1

FORTEN COMPANY
Statement of Cash Flows
For Year Ended December 31, 2017
Cash flows from operating activities
Net Income	108175
Adjustments to reconcile net income to net cash provided by operations:
Depreciation expense	37750
Accounts receivable increase	-23815
Inventory increase	-32356
Prepaid expense decrease	855
Accounts payable decrease	-70034
Loss on disposal of equipment	22125
Net cash provided by operating activities		42700
Cash flows from investing activities
Cash paid for equipment	-64000
Cash received from sale of equipment	28625
Net cash used in investing activities		-35375
Cash flows from financing activities:
Cash borrowed on short-term note	5700
Cash paid on long-term note	-58625
Cash received from issuing stock	84000
Cash paid for dividends	-53500
Net cash used in financing activities		-22425
Net increase (decrease) in cash		-15100
Cash balance at beginning of year		90500
Cash balance at end of year		75400