orten 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, (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.   FORTEN COMPANY Comparative Balance Sheets December 31   Current Year   Prior Year Assets                       Cash   $ 58,900         $ 79,500     Accounts receivable     74,830           56,625     Inventory     284,656           257,800     Prepaid expenses     1,270           2,015     Total current assets     419,656           395,940     Equipment     151,500           114,000     Accum. depreciation—Equipment     (39,625 )         (49,000 )   Total assets   $ 531,531         $ 460,940     Liabilities and Equity                       Accounts payable   $ 59,141         $ 123,675     Short-term notes payable     11,800           7,200     Total current liabilities     70,941           130,875     Long-term notes payable     62,000           54,750     Total liabilities     132,941           185,625     Equity                       Common stock, $5 par value     171,750           156,250     Paid-in capital in excess of par, common stock     46,500           0     Retained earnings     180,340           119,065     Total liabilities and equity   $ 531,531         $ 460,940          FORTEN COMPANY Income Statement For Current Year Ended December 31 Sales       $ 612,500     Cost of goods sold         291,000     Gross profit         321,500     Operating expenses               Depreciation expense $ 26,750           Other expenses   138,400     165,150     Other gains (losses)               Loss on sale of equipment         (11,125 )   Income before taxes         145,225     Income taxes expense         32,650     Net income       $ 112,575         Additional Information on Current Year Transactions The loss on the cash sale of equipment was $11,125 (details in b). Sold equipment costing $64,875, with accumulated depreciation of $36,125, for $17,625 cash. Purchased equipment costing $102,375 by paying $42,000 cash and signing a long-term note payable for the balance. Borrowed $4,600 cash by signing a short-term note payable. Paid $53,125 cash to reduce the long-term notes payable. Issued 3,100 shares of common stock for $20 cash per share. Declared and paid cash dividends of $51,300

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
icon
Concept explainers
Topic Video
Question

Use the following information for the Problems below.

Skip to question

 

[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, (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.
 

FORTEN COMPANY
Comparative Balance Sheets
December 31
  Current Year   Prior Year
Assets                      
Cash   $ 58,900         $ 79,500    
Accounts receivable     74,830           56,625    
Inventory     284,656           257,800    
Prepaid expenses     1,270           2,015    
Total current assets     419,656           395,940    
Equipment     151,500           114,000    
Accum. depreciation—Equipment     (39,625 )         (49,000 )  
Total assets   $ 531,531         $ 460,940    
Liabilities and Equity                      
Accounts payable   $ 59,141         $ 123,675    
Short-term notes payable     11,800           7,200    
Total current liabilities     70,941           130,875    
Long-term notes payable     62,000           54,750    
Total liabilities     132,941           185,625    
Equity                      
Common stock, $5 par value     171,750           156,250    
Paid-in capital in excess of par, common stock     46,500           0    
Retained earnings     180,340           119,065    
Total liabilities and equity   $ 531,531         $ 460,940    
 

  

FORTEN COMPANY
Income Statement
For Current Year Ended December 31
Sales       $ 612,500    
Cost of goods sold         291,000    
Gross profit         321,500    
Operating expenses              
Depreciation expense $ 26,750          
Other expenses   138,400     165,150    
Other gains (losses)              
Loss on sale of equipment         (11,125 )  
Income before taxes         145,225    
Income taxes expense         32,650    
Net income       $ 112,575    
 

 
Additional Information on Current Year Transactions

  1. The loss on the cash sale of equipment was $11,125 (details in b).
  2. Sold equipment costing $64,875, with accumulated depreciation of $36,125, for $17,625 cash.
  3. Purchased equipment costing $102,375 by paying $42,000 cash and signing a long-term note payable for the balance.
  4. Borrowed $4,600 cash by signing a short-term note payable.
  5. Paid $53,125 cash to reduce the long-term notes payable.
  6. Issued 3,100 shares of common stock for $20 cash per share.
  7. Declared and paid cash dividends of $51,300.

 

Problem 16-3A Indirect: Statement of cash flows LO A1, P2, P3

Required:
1. Prepare a complete statement of cash flows using the indirect method for the current year. (Amounts to be deducted should be
indicated with a minus sign.)
FORTEN COMPANY
Statement of Cash Flows
For Current Year Ended December 31
Cash flows from operating activities
Adjustments to reconcile net income to net cash provided by operations:
$
Cash flows from investing activities
Transcribed Image Text:Required: 1. Prepare a complete statement of cash flows using the indirect method for the current year. (Amounts to be deducted should be indicated with a minus sign.) FORTEN COMPANY Statement of Cash Flows For Current Year Ended December 31 Cash flows from operating activities Adjustments to reconcile net income to net cash provided by operations: $ Cash flows from investing activities
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
$
Transcribed Image Text: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 $
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 2 steps with 2 images

Blurred answer
Knowledge Booster
Financial Statements
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education