Forten Company, a merchandiser, recently completed its calendar-year 2015 operat
ID: 2571132 • 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 FORTEN COMPANY Comparative Balance Sheets December 31, 2015 and 2014 2015 2014 Assets Cash Accounts receivable Inventory Prepaid expenses $ 49,800 S 73,500 50,625 275,656 251,800 1,875 65,810 1,250 392,516 Total current assets Equipment Accum. depreciation-Equipment 377,800 157,500108,000 (36,625)(46,000) Total assets $513,391 439,800 Liabilities and Equity Accounts payable Short-term notes payable $ 53,141 114,675 10,000 6,000 120,675 Total current liabilities Long-term notes payable 63,141 65,000 48,750 169,425 162,750150250 185,000120,125 $ 513.391 $439,800 128,141 Total liabilities Equity Common stock, $5 par value Paid-in capital in excess of par, common stock Retained earnings 37,500 Total liabilities and equityExplanation / Answer
Statement of Cash Flows
Cash flows from operating activities: Net income $114975 Adjustments to reconcile net income to net cash provided by operations: Depreciation 20750 Loss on sale of equipment 5125 Accounts receivable increase -15185 Inventory increase -23856 Prepaid expenses decrease 625 Accounts payable decrease -61534 Cash borrowed on short term note 4000 Net Cash provided by operating activities $44900 Cash flows from investing activities Cash received from sale of equipment 11625 Cash paid for equipment -30000 Net Cash used in investing activities -18375 Cash flows from financing activities Cash received from issuing stock 50000 Cash paid on notes payable -50125 Cash paid for dividends -50100 Net Cash used in investing activities -50225 Net increase (decrease) in cash -23700 Cash balance at beginning of year 73500 Cash balance at end of year $49800