Forten Company, a merchandiser, recently completed its calendar-year 2017 operat
ID: 2432320 • Letter: F
Question
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.
Additional Information on Year 2017 Transactions
The loss on the cash sale of equipment was $7,125 (details in b).
Sold equipment costing $52,875, with accumulated depreciation of $32,125, for $13,625 cash.
Purchased equipment costing $98,375 by paying $34,000 cash and signing a long-term note payable for the balance.
Borrowed $4,200 cash by signing a short-term note payable.
Paid $51,125 cash to reduce the long-term notes payable.
Issued 2,700 shares of common stock for $20 cash per share.
Declared and paid cash dividends of $50,500.
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.)
Comparative Balance Sheets
December 31, 2017 and 2016 2017 2016 Assets Cash $ 52,900 $ 75,500 Accounts receivable 68,810 52,625 Inventory 278,656 253,800 Prepaid expenses 1,270 1,995 Total current assets 401,636 383,920 Equipment 155,500 110,000 Accum. depreciation—Equipment (37,625 ) (47,000 ) Total assets $ 519,511 $ 446,920 Liabilities and Equity Accounts payable $ 55,141 $ 117,675 Short-term notes payable 10,600 6,400 Total current liabilities 65,741 124,075 Long-term notes payable 64,000 50,750 Total liabilities 129,741 174,825 Equity Common stock, $5 par value 166,750 152,250 Paid-in capital in excess of par, common stock 39,500 0 Retained earnings 183,520 119,845 Total liabilities and equity $ 519,511 $ 446,920 Part 2 of 3 Required: Prepare a complete statement of cash flows using a spreadsheet, report its operating activitues using the indirect method. (Enter all amounts as posltive values.) 10 points FORTEN COMPAN Spreadsheet for Statement of Cash Flows For Year Ended December 31, 2017 Analysis of Changes Debit eBook December 31, 2016 Credit December 31, 2017 Balance sheet-debit Cash Accounts receivable Inventory Prepaid expenses Equipment 75,500 52.625 253,800 1.995 110.000 493,920 2,900 Print References 52,900 Balance sheet-credit Accumulated depreciation-Equipment Accounts payable Short-term notes payable Long-term notes payable Common stock, S5 par value Paid-in capital in excess of par value, common stock Retained earnings 47.000 117,675 6.400 50,750 152,250 119,845 493,920 Statement of cash flows
Explanation / Answer
Statement of cash flow
Cash flows from operating activties
Net income 114,175
Depreciation 22,750
Loss on sale of equipment $7,125
144050
increase in accounts receivable (16185)
increase in inventory (24856)
decrease in prepaid expense 725
decrease in accounts payable (62534)
Net cash provided by operating activities 41200
Cash flows from investing activties
Purchase of equipment (34,000)
sale of equipment 13,625
Net Cash used by investing activties (20375)
Cash flows from financing activties
payment to long-term notes payable. (51,125 )
issue of short-term note payable 4,200
cash dividends (50,500)
issue of Common stock 54000
Net cash flow used by financing activties (43425)
Net decrease in cash (22600)
Add; cash at beginning 75,500?
Cash at end 52900