Required information [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 $ 69,400 85,400 295,156 1,340 451,296 144,500 (43,125) $ 86,500 63,625 264,800 2,155 417,080 Cash Accounts receivable Inventory Prepaid expenses Total current assets Equipment Accum. depreciation-Equipment 121,000 (52,500) Total assets $52,671 $485,580 Liabilities and Equity Accounts payable Short-term notes payable $ 66,141 13,900 80,041 58,500 138,541 $134,175 8,600 142,775 61,750 204,525 Total current liabilities Long-term notes payable Total liabilities Equity Common stock, $5 par value Paid-in capital in excess of par, common stock Retained earnings 182,250 163,250 57,000 174,880 $52,671 117,805 Total liabilities and equity $485,580 FORTEN COMPANY Income Statement For Current Year Ended December 31 Sales $647,500 298,000 349,500 Cost of goods sold Gross profit Operating expenses Depreciation expense Other expenses Other gains (losses) Loss on sale of equipment $ 33,750 145,400 179,150 (18,125) 152,225 42,450 Income before taxes Income taxes expense Net income $109,775 Additional Information on Current Year Transactions a. The loss on the cash sale of equipment was $18,125 (details in b). b. Sold equipment costing $85,875, with accumulated depreciation of $43,125, for $24,625 cash. c. Purchased equipment costing $109,375 by paying $56,000 cash and signing a long-term note payable for the balance. d. Borrowed $5,300 cash by signing a short-term note payable. e. Paid $56,625 cash to reduce the long-term notes payable. f. Issued 3,800 shares of common stock for $20 cash per share. g. Declared and paid cash dividends of $52,700.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Required information
[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
$ 69,400
85,400
295,156
1,340
$ 86,500
63,625
264,800
2,155
Cash
Accounts receivable
Inventory
Prepaid expenses
Total current assets
Equipment
Accum. depreciation-Equipment
417,080
121,000
(52,500)
451,296
144,500
(43,125)
Total assets
$552,671
$485,580
Liabilities and Equity
Accounts payable
Short-term notes payable
$ 66,141
13,900
80,041
58,500
$134,175
8,600
Total current liabilities
Long-term notes payable
142,775
61,750
204,525
Total liabilities
138,541
Equity
Common stock, $5 par value
Paid-in capital in excess of par, common stock
Retained earnings
182,250
57,000
174,880
163,250
117,805
Total liabilities and equity
$552,671
$485,580
FORTEN COMPANY
Income Statement
For Current Year Ended December 31
Sales
$647,500
298,000
Cost of goods sold
Gross profit
Operating expenses
Depreciation expense
Other expenses
349,500
$ 33,750
145,400
179,150
Other gains (losses)
Loss on sale of equipment
(18,125)
Income before taxes
152,225
42,450
Income taxes expense
Net income
$109,775
Additional Information on Current Year Transactions
a. The loss on the cash sale of equipment was $18,125 (details in b).
b. Sold equipment costing $85,875, with accumulated depreciation of $43,125, for $24,625 cash.
c. Purchased equipment costing $109,375 by paying $56,000 cash and signing a long-term note payable for the balance.
d. Borrowed $5300 cash by signing a short-term note payable.
e. Paid $56,625 cash to reduce the long-term notes payable.
f. Issued 3,800 shares of common stock for $20 cash per share.
g. Declared and paid cash dividends of $52,700.
Transcribed Image Text:Required information [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 $ 69,400 85,400 295,156 1,340 $ 86,500 63,625 264,800 2,155 Cash Accounts receivable Inventory Prepaid expenses Total current assets Equipment Accum. depreciation-Equipment 417,080 121,000 (52,500) 451,296 144,500 (43,125) Total assets $552,671 $485,580 Liabilities and Equity Accounts payable Short-term notes payable $ 66,141 13,900 80,041 58,500 $134,175 8,600 Total current liabilities Long-term notes payable 142,775 61,750 204,525 Total liabilities 138,541 Equity Common stock, $5 par value Paid-in capital in excess of par, common stock Retained earnings 182,250 57,000 174,880 163,250 117,805 Total liabilities and equity $552,671 $485,580 FORTEN COMPANY Income Statement For Current Year Ended December 31 Sales $647,500 298,000 Cost of goods sold Gross profit Operating expenses Depreciation expense Other expenses 349,500 $ 33,750 145,400 179,150 Other gains (losses) Loss on sale of equipment (18,125) Income before taxes 152,225 42,450 Income taxes expense Net income $109,775 Additional Information on Current Year Transactions a. The loss on the cash sale of equipment was $18,125 (details in b). b. Sold equipment costing $85,875, with accumulated depreciation of $43,125, for $24,625 cash. c. Purchased equipment costing $109,375 by paying $56,000 cash and signing a long-term note payable for the balance. d. Borrowed $5300 cash by signing a short-term note payable. e. Paid $56,625 cash to reduce the long-term notes payable. f. Issued 3,800 shares of common stock for $20 cash per share. g. Declared and paid cash dividends of $52,700.
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 financing activities:
Net increase (decrease) in cash
$
Cash balance at December 31, prior year
Cash balance at December 31, current year
$
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 financing activities: Net increase (decrease) in cash $ Cash balance at December 31, prior year Cash balance at December 31, current year $
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