Forten Company's current year income statement, comparative balance sheets, and additional information follow. 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, and (4) all debits to Accounts Payable reflect cash payments for inventory. Sales Cost of goods sold Gross profit Operating expenses (excluding depreciation) Depreciation expense Other gains (losses) Loss on sale of equipment Income before taxes Income taxes expense Net income Assets Cash FORTEN COMPANY Income Statement For Current Year Ended December 31 Accounts receivable Inventory Prepaid expenses Total current assets FORTEN COMPANY Comparative Balance Sheets December 31 Equipment Accumulated depreciation-Equipment i Total assets $ 140,400 28,750 Liabilities and Equity Accounts payable Long-term notes payable Total liabilities Equity Common stock, $5 par value Paid-in capital in excess of par, common stock Retained earnings Total liabilities and equity $ 622,500 293,000 329,500 169,150 (13,125) 147,225 35,450 $ 111,775 Current Year $ 61,900 77,850 287,656 1,290 428,696 149,500 (40,625) $ 537,571 $ 61,141 73,400 134,541 174,750 49,500 178,780 $ 537,571 d. Paid $49,325 cash to reduce the long-term notes payable. e. Issued 3,300 shares of common stock for $20 cash per share. f. Declared and paid cash dividends of $51,700 Prior Year $ 81,500 58,625 259,800 2,055 401,980 116,000 (50,000) $ 467,980 $ 126,675 64,350 191,025 158,250 0 118,705 $ 467,980 Additional Information on Current Year Transactions a. The loss on the cash sale of equipment was $13,125 (details in b) b. Sold equipment costing $70,875, with accumulated depreciation of $38,125, for $19,625 cash. c. Purchased equipment costing $104,375 by paying $46,000 cash and signing a long-term notes payable for the balance.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Forten Company's current year income statement, comparative balance sheets, and additional information follow. 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, and (4) all debits to Accounts Payable reflect cash payments for inventory.
Sales
Cost of goods sold
Gross profit
Operating expenses (excluding depreciation)
Depreciation expense
Other gains (losses)
Loss on sale of equipment
Income before taxes
Income taxes expense
Net income
Assets.
Cash
FORTEN COMPANY
Income Statement
For Current Year Ended December 31
Accounts receivable
Inventory
Prepaid expenses
Total current assets.
FORTEN COMPANY
Comparative Balance Sheets
December 311
Equipment
Accumulated depreciation-Equipment
Total assets
Liabilities and Equity:
Accounts payable
$ 140,400
28,750
Long-term notes payable
Total liabilities
Equity
Common stock, $5 par value
Paid-in capital in excess of par, common stock
Retained earnings
Total liabilities and equity
$622,500
293,000
329,500
169,150
(13,125)
147,225
35,450
$ 111,775
Current Year
$ 61,900
77,850
287,656
1,290
428,696
149,500
(40,625)
$ 537,571
$61,141
73,400
134,541
d. Paid $49,325 cash to reduce the long-term notes payable.
e. Issued 3,300 shares of common stock for $20 cash per share..
f. Declared and paid cash dividends of $51,700.
174,750
49,500
178,780
$ 537,571
Prior Year
$ 81,500
58,625
259,800
2,055
401,980
116,000
(50,000)
$ 467,980
$ 126,675
64,350
191,025
158,250
0
118,705
$ 467,980
Additional Information on Current Year Transactions
a. The loss on the cash sale of equipment was $13,125 (details in b)
b. Sold equipment costing $70,875, with accumulated depreciation of $38,125, for $19,625 cash
c. Purchased equipment costing $104,375 by paying $46,000 cash and signing a long-term notes payable for the
balance.
Transcribed Image Text:Forten Company's current year income statement, comparative balance sheets, and additional information follow. 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, and (4) all debits to Accounts Payable reflect cash payments for inventory. Sales Cost of goods sold Gross profit Operating expenses (excluding depreciation) Depreciation expense Other gains (losses) Loss on sale of equipment Income before taxes Income taxes expense Net income Assets. Cash FORTEN COMPANY Income Statement For Current Year Ended December 31 Accounts receivable Inventory Prepaid expenses Total current assets. FORTEN COMPANY Comparative Balance Sheets December 311 Equipment Accumulated depreciation-Equipment Total assets Liabilities and Equity: Accounts payable $ 140,400 28,750 Long-term notes payable Total liabilities Equity Common stock, $5 par value Paid-in capital in excess of par, common stock Retained earnings Total liabilities and equity $622,500 293,000 329,500 169,150 (13,125) 147,225 35,450 $ 111,775 Current Year $ 61,900 77,850 287,656 1,290 428,696 149,500 (40,625) $ 537,571 $61,141 73,400 134,541 d. Paid $49,325 cash to reduce the long-term notes payable. e. Issued 3,300 shares of common stock for $20 cash per share.. f. Declared and paid cash dividends of $51,700. 174,750 49,500 178,780 $ 537,571 Prior Year $ 81,500 58,625 259,800 2,055 401,980 116,000 (50,000) $ 467,980 $ 126,675 64,350 191,025 158,250 0 118,705 $ 467,980 Additional Information on Current Year Transactions a. The loss on the cash sale of equipment was $13,125 (details in b) b. Sold equipment costing $70,875, with accumulated depreciation of $38,125, for $19,625 cash c. Purchased equipment costing $104,375 by paying $46,000 cash and signing a long-term notes payable for the balance.
Required:
1. Prepare a complete statement of cash flows using the indirect method for the current year.
Note: Amounts to be deducted should be indicated with a minus sign.
Cash flows from operating activities
Adjustments to reconcile net income to net cash provided by operations
Income statement items not affecting cash
FORTEN COMPANY
Statement of Cash Flows
For Current Year Ended December 31
Changes in current assets and current liabilities
Cash flows from investing activities
Cash flows from financing activities
Net increase (decrease) in cash
Cash balance at December 31, prior year
Cash balance at December 31, current year
$
S
$
0
0
0
0
0
Transcribed Image Text:Required: 1. Prepare a complete statement of cash flows using the indirect method for the current year. Note: Amounts to be deducted should be indicated with a minus sign. Cash flows from operating activities Adjustments to reconcile net income to net cash provided by operations Income statement items not affecting cash FORTEN COMPANY Statement of Cash Flows For Current Year Ended December 31 Changes in current assets and current liabilities Cash flows from investing activities Cash flows from financing activities Net increase (decrease) in cash Cash balance at December 31, prior year Cash balance at December 31, current year $ S $ 0 0 0 0 0
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