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 theyear, (1) all sales are credit sales, (2) all credits to Accounts Receivable reflect cash receipts from customers, (3) allpurchases of inventory are on credit, (4) all debits to Accounts Payable reflect cash payments for inventory, and (5) OtherExpenses are paid in advance and are initially debited to Prepaid Expenses.FORTEN COMPANYComparative Balance SheetsDecember 31Current YearPrior YearAssets$ 69,40085,400295,1561,340$ 86,50063,625264,8002,155CashAccounts receivableInventoryPrepaid expensesTotal current assetsEquipmentAccum. depreciation-Equipment417,080121,000(52,500)451,296144,500(43,125)Total assets$552,671$485,580Liabilities and EquityAccounts payableShort-term notes payable$ 66,14113,90080,04158,500$134,1758,600Total current liabilitiesLong-term notes payable142,77561,750204,525Total liabilities138,541EquityCommon stock, $5 par valuePaid-in capital in excess of par, common stockRetained earnings182,25057,000174,880163,250117,805Total liabilities and equity$552,671$485,580FORTEN COMPANYIncome StatementFor Current Year Ended December 31Sales$647,500298,000Cost of goods soldGross profitOperating expensesDepreciation expenseOther expenses349,500$ 33,750145,400179,150Other gains (losses)Loss on sale of equipment(18,125)Income before taxes152,22542,450Income taxes expenseNet income$109,775Additional Information on Current Year Transactionsa. 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 $52,700. Required:1. Prepare a complete statement of cash flows using the indirect method for the current year. (Amounts to be deducted should beindicated with a minus sign.)FORTEN COMPANYStatement of Cash FlowsFor Current Year Ended December 31Cash flows from operating activitiesAdjustments to reconcile net income to net cash provided by operations:$Cash flows from investing activitiesCash flows from financing activities:Net increase (decrease) in cash$Cash balance at December 31, prior yearCash balance at December 31, current year$

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Uploaded: 2024-03-04T10:43:15.000Z
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Description: 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 theyear, (1) all sales are credit sales, (2)

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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 1,340 451,296 144,500 (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.