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Prepare a complete statement of cash flows using the direct method. Note: Amounts to be deducted should be indicated with a minus sign.

Prepare a complete statement of cash flows using the direct method. Note: Amounts to be deducted should be indicated with a minus sign.

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Prepare a complete statement of cash flows using the direct method.

Note: Amounts to be deducted should be indicated with a minus sign.

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 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 Additional Information on Current Year Transactions $ 146,400 34,750 d. Paid $51,725 cash to reduce the long-term notes payable. e. Issued 3,900 shares of common stock for $20 cash per share. f. Declared and paid cash dividends of $52,900. $ 652,500 299,000 353,500 Current Year $ 109,375 $ 70,900 86,910 296,656 1,350 455,816 143,500 (43,625) $ 555,691 $ 67,141 72,200 139,341 181,150 183,750 58,500 174,100 $ 555,691 (19,125) 153,225 43,850 Prior Year $ 87,500 64,625 265,800 2,175 420, 100 122,000 (53,000) $ 489,100 $ 135,675 71,550 207, 225 164, 250 0 117,625 $ 489,100 a. The loss on the cash sale of equipment was $19,125 (details in b). b. Sold equipment costing $88,875, with accumulated depreciation of $44,125, for $25,625 cash. c. Purchased equipment costing $110,375 by paying $58,000 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 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 Additional Information on Current Year Transactions $ 146,400 34,750 d. Paid $51,725 cash to reduce the long-term notes payable. e. Issued 3,900 shares of common stock for $20 cash per share. f. Declared and paid cash dividends of $52,900. $ 652,500 299,000 353,500 Current Year $ 109,375 $ 70,900 86,910 296,656 1,350 455,816 143,500 (43,625) $ 555,691 $ 67,141 72,200 139,341 181,150 183,750 58,500 174,100 $ 555,691 (19,125) 153,225 43,850 Prior Year $ 87,500 64,625 265,800 2,175 420, 100 122,000 (53,000) $ 489,100 $ 135,675 71,550 207, 225 164, 250 0 117,625 $ 489,100 a. The loss on the cash sale of equipment was $19,125 (details in b). b. Sold equipment costing $88,875, with accumulated depreciation of $44,125, for $25,625 cash. c. Purchased equipment costing $110,375 by paying $58,000 cash and signing a long-term notes payable for the balance.
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