Question

Use the following information for the Problems below.

[The following information applies to the questions displayed 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
Assets
Cash	$	79,900			$	93,500
Accounts receivable		95,970				70,625
Inventory		305,656				271,800
Prepaid expenses		1,410				2,295
Total current assets		482,936				438,220
Equipment		137,500				128,000
Accum. depreciation—Equipment		(46,625	)			(56,000	)
Total assets	$	573,811			$	510,220
Liabilities and Equity
Accounts payable	$	73,141			$	144,675
Short-term notes payable		16,000				10,000
Total current liabilities		89,141				154,675
Long-term notes payable		55,000				68,750
Total liabilities		144,141				223,425
Equity
Common stock, $5 par value		202,750				170,250
Paid-in capital in excess of par, common stock		57,500				0
Retained earnings		169,420				116,545
Total liabilities and equity	$	573,811			$	510,220

  

FORTEN COMPANY Income Statement For Year Ended December 31, 2017
Sales				$	682,500
Cost of goods sold					305,000
Gross profit					377,500
Operating expenses
Depreciation expense	$	40,750
Other expenses		152,400			193,150
Other gains (losses)
Loss on sale of equipment					(25,125	)
Income before taxes					159,225
Income taxes expense					52,250
Net income				$	106,975

Problem 12-4AA Indirect: Cash flows spreadsheet LO P1, P2, P3, P4

Additional Information on Year 2017 Transactions

Net income was $106,975.

Accounts receivable increased.

Inventory increased.

Prepaid expenses decreased.

Accounts payable decreased.

Depreciation expense was $40,750.

Sold equipment costing $106,875, with accumulated depreciation of $50,125, for $31,625 cash. This yielded a loss of $25,125.

Purchased equipment costing $116,375 by paying $70,000 cash and (i.) by signing a long-term note payable for the balance.

Borrowed $6,000 cash by signing a short-term note payable.

Paid $60,125 cash to reduce the long-term notes payable.

Issued 4,500 shares of common stock for $20 cash per share.

Declared and paid cash dividends of $54,100.

  
Required:
Prepare a complete statement of cash flows using a spreadsheet; report its operating activities using the indirect method. (Enter all amounts as positive values.) Please show the work (math for getting numbers)

FORTEN COM Statement of Cash Flows For Year Ended December 31, 2017 Cash flows from operating activities Net income 106,975 Adjustments to reconcile net income to net cash provided by operations Accounts receivable increase Inventory increase Prepaid expense decrease Accounts payable decrease Depreciation expense Loss on disposal of equipment (25,345) (33,856) 885 (71,534) 40,750 25,125 $43,000 Net cash provided by operating activities Cash flows from investing activities Cash received from sale of equipment Cash paid for equipment 31,625 (70,000) Net cash used in investing activities (38,375) Cash flows from financing activities: Cash borrowed on short-term note Cash paid on long-term note Cash received from issuing stock Cash paid for dividends 6,000 (60,125 90,000 (54,100) Net cash used in finan Net increase (decrease) in cash Cash balance at beginning of year Cash balance at end of year (18,225) $(13,600) activities

  

Answer 1

FORTEN COMPAY Statement of Cash Flows For Year Ended December 31,2017 Cash Flows from Operating activities Net Income Adjustments to reconcile net income to net cash provided by operations Accounts receivable increase Inventory increase Prepaid expense Accounts payable decrease Depreciation expense Loss on disposal of equipment 1,06,975 25,345 33,856 885 -71,534 40,750 25,125 decrease Net cash provided by operating activities Cash Flow from investing activities: cash receivd from sale of equipment cash paid for equipment 43,000 31,625 70,000 Net cash used in investing activities Cash Flows from financing activities: Ccash borrowed on short-term note cash paid on long-term note cash received from issuing stock cash paid for dividends -38,375 6,000 60,125 90,000 54,100 Net cash used in financing activities Net increase (decrease) in cash Cash balance at beginning of year Cash balance at end of year 18,225 -13,600 93,500 79,900