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. FORTEN COMPANY Income Statement For Current Year Ended December 31 Sales Cost of goods sold Gross profit Operating expenses (excluding depreciation) $ 140,400 28,750 Depreciation expense Other gains (losses) Loss on sale of equipment Income before taxes Income taxes expense Net income Assets Cash Accounts receivable Inventory Prepaid expenses Total current assets FORTEN COMPANY Comparative Balance Sheets December 31 Equipment Accumulated depreciation-Equipment Total assets 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 Prior 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 $ 81,500 58,625 259,800 2,055 $ 126,675 64,350 191,025 158,250 118,705 $ 537,571 $ 467,980 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. 401,980 116,000 (50,000) $ 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.
Reporting Cash Flows
Reporting of cash flows means a statement of cash flow which is a financial statement. A cash flow statement is prepared by gathering all the data regarding inflows and outflows of a company. The cash flow statement includes cash inflows and outflows from various activities such as operating, financing, and investment. Reporting this statement is important because it is the main financial statement of the company.
Balance Sheet
A balance sheet is an integral part of the set of financial statements of an organization that reports the assets, liabilities, equity (shareholding) capital, other short and long-term debts, along with other related items. A balance sheet is one of the most critical measures of the financial performance and position of the company, and as the name suggests, the statement must balance the assets against the liabilities and equity. The assets are what the company owns, and the liabilities represent what the company owes. Equity represents the amount invested in the business, either by the promoters of the company or by external shareholders. The total assets must match total liabilities plus equity.
Financial Statements
Financial statements are written records of an organization which provide a true and real picture of business activities. It shows the financial position and the operating performance of the company. It is prepared at the end of every financial cycle. It includes three main components that are balance sheet, income statement and cash flow statement.
Owner's Capital
Before we begin to understand what Owner’s capital is and what Equity financing is to an organization, it is important to understand some basic accounting terminologies. A double-entry bookkeeping system Normal account balances are those which are expected to have either a debit balance or a credit balance, depending on the nature of the account. An asset account will have a debit balance as normal balance because an asset is a debit account. Similarly, a liability account will have the normal balance as a credit balance because it is amount owed, representing a credit account. Equity is also said to have a credit balance as its normal balance. However, sometimes the normal balances may be reversed, often due to incorrect journal or posting entries or other accounting/ clerical errors.
Please do not give solution in image format thanku
![Required information
Use the following information for the Problems below. (Algo)
[The following information applies to the questions displayed below.]
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.
FORTEN COMPANY
Income Statement.
For Current Year Ended December 31
Sales
Cost of goods sold
Gross profit
Operating expenses (excluding depreciation) $ 140,400
28,750
Depreciation expense
Other gains (losses)
Loss on sale of equipment
Income before taxes
Income taxes expense
Net income
Assets
Cash
Accounts receivable
Inventory
Prepaid expenses
Total current assets
FORTEN COMPANY
Comparative Balance Sheets
December 31
Equipment
Accumulated depreciation-Equipment
Total assets
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 Prior 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.
$ 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.
רח רחו](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fa880cc3d-71b2-44bc-9eb8-ccb18aa2c0ed%2Fe57e1f2d-ee23-453d-9ad0-a2202f9d7a81%2F6o6xfco_processed.png&w=3840&q=75)
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
