Please help me to continuue the problem. I am getting incorect answers. Forten C
ID: 2584861 • Letter: P
Question
Please help me to continuue the problem. I am getting incorect answers.
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 68,625 271,156 1,300 51,119 64,500 53,625 245,800 1,725 Prepaid expenses Total current assets Equipment Accum. depreciation-Equipment 392,200 147,125 (38,050) 365,650 105,000 (45,000) Total assets 501,275 425,650 Liabilities and Equity Accounts payable Short-term notes payable 59,575 108,950 7,000 4,500 66,575 113,450 Total current liabilities Long-term notes payable 35,500 148,950 146,250 130,450 $ 501,275 $425,650 35,425 Total liabilities Equity Common stock, $5 par value Paid-in capital in excess of par, common stock Retained eamings 102,000 156,250 30,000 213,025 Total liabilities and equity FORTEN COMPANY Income Statement For Year Ended December 31, 2015 Sales Cost of goods sold $ 597,500 291,000 306,500 Gross proft Operating expenses Depreciation expense Other expenses 18,500 127,050 145,550 Other gains (losses) Loss on sale of equipment (4,125) Income before taxes Income taxes expense 156,825 27,250 Net income S 129,575 Additional Information on Year 2015 Transactions a. The loss on the cash sale of equipment was $4,125 (details in b). b. Sold equipment costing $43,925, with accumulated depreciation of $25,450, for $14,350 cash. c. Purchased equipment costing $86,050 by paying $45,000 cash and signing a long-term note payable for the balance. d. Borrowed $2,500 cash by signing a short-term note payable e. Paid $41,125 cash to reduce the long-term notes payable f. Issued 2,000 shares of common stock for $20 cash per share g. Declared and paid cash dividends of $47,000.Explanation / Answer
FORTEN COMPANY Statement of Cash Flows For Year Ended December 31, 2015 Cash flows from operating activities Net Income 129575 Adjustments to reconcile net income to net cash provided by operations: Depreciation expense 18,500 Accounts receivable increase -15,000 Inventory increase -25,356 Prepaid expense decrease 425 Accounts payable decrease -49,375 Loss on disposal of equipment 4,125 Net cash provided by operating activities 62,894 Cash flows from investing activities Cash paid for equipment -45,000 Cash received from sale of equipment 14,350 Net cash used in investing activities -30,650 Cash flows from financing activities: Cash borrowed on short-term note 2,500 Cash paid on long-term note -41,125 Cash received from issuing stock 40,000 Cash paid for dividends -47,000 Net cash used in financing activities -45,625 Net increase (decrease) in cash -13,381 Cash balance at beginning of year 64,500 Cash balance at end of year 51119