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 $ 54,400 70,310 288, 156 1,280 486,146 154, see (38,125) $ 522,521 $ 76,588 53,625 254,188 2,085 386,930 111,eee (47,500) $ 450, 430 Assets Cash Accounts receivable Inventory Prepaid expenses Total current assets Equipment Accum. depreciation Equipment Total assets Liabilities and Equity Accounts payable Short-term notes payable Total current liabilities Long-term notes payable Total Ilabilities Equity Connon stock, $5 par value Paid-in capital in excess of par, con stock Retained earnings Total liabilities and equity $ 56,141 18,900 67,041 63,5ee 138,541 $ 119,175 6,688 125,775 51.750 177,525 153, 250 167,250 42,eee 182,730 $ 522,521 119,655 $ 450, 430 $ 597,500 288,eee 389,586 FORTEN COMPANY Income Statement For Current Year Ended December 31 Sales Cost of goods sold Gross profit Operating expenses Depreciation expense $ 23,750 Other expenses 135,400 Other gains (losses) Loss on sale of equipment Income before taxes Income taxes expense Net income 159, 150 (8,125) 142, 225 28,450 $ 113,775 Additional Information on Current Year Transactions a. The loss on the cash sale of equipment was $8,125 (detalls in b. b. Sold equipment costing $55.875, with accumulated depreciation of $33,125, for $14.625 cash. C. Purchased equipment costing $99,375 by paying $36.000 cash and signing a long-term note payable for the balance. d. Borrowed $4.300 cash by signing a short-term note payable e. Pald $51.625 cash to reduce the long-term notes payable. f. Issued 2.800 shares of common stock for $20 cash per share. g. Declared and paid cash dividends of $50.700. Problem 12-3A 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 Net income Adjustments to reconcile net income to net cash provided by operations: Depreciation expense Loss on disposal of equipment Accounts receivable increase Inventory increase Prepaid expense decrease Accounts payable decrease $ 0 Cash flows from investing activities Cash paid for equipment Loss on disposal of equipment 0 Cash flows from financing activities Notes payable long-term increase Prepaid expense increase 0 0 $ Net increase (decrease) in cash Cash balance at December 31, prior year Cash balance at December 31, current year 0
