Forten Company, a merchandiser, recently completed its calendar-year 2015 operat
ID: 2484499 • Letter: F
Question
Forten Company, a merchandiser, recently completed its calendar-year 2015 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.
2015
2014
The loss on the cash sale of equipment was $4,300 (details in b).
Sold equipment costing $44,800, with accumulated depreciation of $25,800, for $14,700 cash.
Purchased equipment costing $87,100 by paying $50,000 cash and signing a long-term note payable for the balance.
Borrowed $3,200 cash by signing a short-term note payable.
Paid $42,525 cash to reduce the long-term notes payable.
Issued 2,700 shares of common stock for $20 cash per share.
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.)
Forten Company, a merchandiser, recently completed its calendar-year 2015 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 Statement of Cash Flows For Year Ended December 31, 2015 Cash flows from operating activities Net Income Adjustments to reconcile net income to net cash provided by operations: Adjustments to reconcile net income to net c 0 Cash flows from investing activities Cash flows from financing activities: Net increase (decrease) in cash Cash balance at beginning of year Cash balance at end of year 0 0Explanation / Answer
Forten Company All Amounts in $ Statement of Cash Flows For theYear Ended December 31, 2015 Cash Flows from Operating Activities Net Income per Income Statement 123500 Add : Depreciation 19200 Add : Loss on Sale of Equipment 4300 Add : Income Tax Expense 29000 52500 Cash Flows before Working Capital changes 176000 Add : Increase in Accounts Receivable -16400 Add : Increase in Inventory -27106 Less : Decrease in Prepaid Expenses 460 Less : Decrease in Accounts Payable -51125 Add : Increase in Short-Term Notes Payable 3200 -90971 Cash Inflows from Operating Activities 85029 Cash Flows from Investing Activities Sale of Equipment 14700 Purchase of Equipment -87100 -72400 Cash Flows from Financing Activities Long Term Notes issued 37100 Long Term Notes repaid -42525 Income Tax Expense Paid -29000 Issue of Common Stock 54000 Dividends Paid -49800 -30225 Net Cash Outflows during the year -17596 Opening Cash/Cash Equivalents 68000 Closing Cash/Cash Equivalents 50404