Forten Company, a merchandiser, recently completed its calendar-year 2016 operat
ID: 2575997 • Letter: F
Question
Forten Company, a merchandiser, recently completed its calendar-year 2016 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, 2016 and 2015 2016 2015 Assets Cash S 57,344 67,000 56,125 267,406240,800 1,850 365,775 110,000 43,300) (50,000) S 507,225 $ 425,775 72,125 Prepaid expenses Total current assets Equipment Accum. depreciation-Equipment Total assets 1,400 398,275 152,250 8 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 eamings S 59,075 $ 109,700 5,000 114,700 38,000 152,700 8,000 67,075 32,675 99,750 160,000 37,500 209,975 147,500 125,575 S 507,225 $ 425,775 0 Total liabilities and equityExplanation / Answer
FORTEN COMPANY Statement of Cash Flows For the year ended December 31, 2016 Amount $ Operating Activities Net Income 1,33,400 Adjustments: Non-Cash adjustment: Depreciation 19,000 Loss on sale of equipment 4,250 Due to changes in Working capital Due to changes in accounts receivable (72125-56125) -16,000 Due to changes in Inventories (267406-240800) -26,606 Due to changes in Prepaid expenses (1400-1850) 450 Due to changes in accounts payable (59075-109700) -50,625 Due to changes in short-term notes payable (8000-5000) 3,000 Net Cash provided (used) by operating activities 66,869 Investing Activities Cash used to acquire equipment (152250+44550-110000) -86,800 Cash receipts from sale of Equipment 14,600 Due to change in short-term investments Net cash provided (used) by investing activities -72,200 Financing Activities Due to change in notes payable Due to change in long-term debt (32675-38000) -5,325 Due to change in common stock (160000+37500-147500) 50,000 Payment of common dividends -49,000 Net cash provided (used) by investing activities) -4,325 Net increase/decrease in cash -9,656 Add: Cash balance at the begining of the year 67,000 Cash balance at the end of the year 57,344