Forten Company, a merchandiser, recently completed its calendar-year 2013 operat
ID: 2586910 • Letter: F
Question
Forten Company, a merchandiser, recently completed its calendar-year 2013 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 balance sheets and income statement follow FORTEN COMPANY Comparative Balance Sheets December 31, 2013 and 2012 2013 2012 Assets Cash Accounts receivable Merchandise inventory Prepaid expenses Equipment Accum. depreciation Equipment $ 52,779 70,025 269,656 1,340 149,175 (40,150) 65,500 54,625 243,800 1,775 107,000 (47,000) Total assets $502,825 425,700 Liabilities and Equity Accounts payable Short-term notes payable Long-term notes payable Common stock, $5 par value Paid-in capital in excess of par, common stock Retained earnings $ 59,375 $109,250 4,700 36,500 146,750 7,400 34,325 157,750 33,000 210,975 128,500 Total liabilities and equity $ 502,825 425,700Explanation / Answer
FORTEN COMPANY Statement of Cash Flows For Year Ended December 31, 2013 Cash flows from operating activities Net Income 130275 Adjustments to reconcile net income to net cash provided by operations: Depreciation expense 18,700 Accounts receivable increase -15,400 Inventory increase -25,856 Prepaid expense decrease 435 Accounts payable decrease -49,875 Loss on disposal of equipment 4,175 Net cash provided by operating activities 62,454 Cash flows from investing activities Cash paid for equipment -47,000 Cash received from sale of equipment 14,450 Net cash used in investing activities -32550 Cash flows from financing activities: Cash borrowed on short-term note 2,700 Cash paid on long-term note -41,525 Cash received from issuing stock 44,000 Cash paid for dividends -47,800 Net cash used in financing activities -42625 Net increase (decrease) in cash -12721 Cash balance at beginning of year 65,500 Cash balance at end of year 52779