Refer to the information reported about Forten Company in Problem 12-3A.
In Problem 12-3A
Forten Company, a merchandiser, recently completed its calendar-year 2015 operations. 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. The company's income statement and balance sheets follow.

Additional Information on Year 2015 Transactions
a. The loss on the cash sale of equipment was $5,125 (details in b).
b. Sold equipment costing $46,875, with accumulated depreciation of $30,125, for $11,625 cash.
c. Purchased equipment costing $96,375 by paying $30,000 cash and signing a long-term note payable for the balance.
d. Borrowed $4,000 cash by signing a short-term note payable.
e. Paid $50,125 cash to reduce the long-term notes payable.
f. Issued 2,500 shares of common stock for $20 cash per share.
g. Declared and paid cash dividends of $50,100.
Required
Prepare a complete statement of cash flows using a spreadsheet as in Exhibit 12A.1; report its operating activities using the indirect method. Identify the debits and credits in the Analysis of Changes columns with letters that correspond to the following list of transactions and events.
a. Net income was $114,975.
b. Accounts receivable increased.
c. Inventory increased.
d. Prepaid expenses decreased.
e. Accounts payable decreased.
f. Depreciation expense was $20,750.
g. Sold equipment costing $46,875, with accumulated depreciation of $30,125, for $11,625 cash. This yielded a loss of $5,125.
h. Purchased equipment costing $96,375 by paying $30,000 cash and
i. By signing a long-term note payable for the balance.
j. Borrowed $4,000 cash by signing a short-term note payable.
k. Paid $50,125 cash to reduce the long-term notes payable.
l. Issued 2,500 shares of common stock for $20 cash per share.
m. Declared and paid cash dividends of $50,100.

Transcribed Image Text:

FORTEN COMPANY Income Statement For Year Ended December 31, 2015 Depreciation expense Other expenses $20,750 132,400 53,150 Other gains (losses) Loss on sale of equipment taxes s expense $114,975 FORTEN COMPANY Comparative Balance Sheets December 31, 2015 and 2014 $49,800 73,500 Accounts receivable Liabilities and Equity Long-term notes payable Common stock, $5 par value Paid-in capital in excess of par, common stock Retained earnings Total liabilities and equity