Forten Company's current-year income statement, comparative balance sheets, and additional information follow. For the year, (1)...
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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. FORTEN COMPANY FORTEN COMPANY Income Statement Comparative Balance Sheets For Current Year Ended December 31 At December 31 Current Year Prior Year Sales.. $582,500 Assets Cost of goods sold. 285,000 Cash... $49,800 $73,500 Gross profit.. 297,500 Accounts receivable 65,810 50,625 Operating expenses (excluding depreciation).. $132,400 Inventory.. 275,656 251,800 Depreciation expense 20,750 153,150 Prepaid expenses. 1,250 1,875 Other gains (losses) Total current assets. 392,516 377,800 Loss on sale of equipment.. (5,125) Equipment..... 157,500 108,000 Income before taxes. Income taxes expense. Net income. 139,225 Accum. depreciation-Equipment. (36,625) (46,000) 24,250 Total assets $513,391 $439,800 $114,975 Liabilities and Equity Accounts payable $53,141 $114,675 Additional Information on Current-Year 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 notes payable for the balance. d. Paid $46,125 cash to reduce the long-term notes payable. e. Issued 2,500 shares of common stock for $20 cash per share. f. Declared and paid cash dividends of $50,100. Required 1. Prepare a complete statement of cash flows using the indirect method for the current year. Disclose noncash investing and financing activities in a note. any Analysis Component 2. Analyze and discuss the statement of cash flows prepared in part 1, giving special attention to the wisdom of the cash dividend payment. Long-term notes payable. 75,000 54,750 Total liabilities. 128,141 169,425 Equity Common stock, $5 par value 162,750 150,250 Paid-in capital in excess of par, common stock... 37,500 0 Retained earnings. 185,000 120,125 Total liabilities and equity. $513,391 $439,800 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. FORTEN COMPANY FORTEN COMPANY Income Statement Comparative Balance Sheets For Current Year Ended December 31 At December 31 Current Year Prior Year Sales.. $582,500 Assets Cost of goods sold. 285,000 Cash... $49,800 $73,500 Gross profit.. 297,500 Accounts receivable 65,810 50,625 Operating expenses (excluding depreciation).. $132,400 Inventory.. 275,656 251,800 Depreciation expense 20,750 153,150 Prepaid expenses. 1,250 1,875 Other gains (losses) Total current assets. 392,516 377,800 Loss on sale of equipment.. (5,125) Equipment..... 157,500 108,000 Income before taxes. Income taxes expense. Net income. 139,225 Accum. depreciation-Equipment. (36,625) (46,000) 24,250 Total assets $513,391 $439,800 $114,975 Liabilities and Equity Accounts payable $53,141 $114,675 Additional Information on Current-Year 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 notes payable for the balance. d. Paid $46,125 cash to reduce the long-term notes payable. e. Issued 2,500 shares of common stock for $20 cash per share. f. Declared and paid cash dividends of $50,100. Required 1. Prepare a complete statement of cash flows using the indirect method for the current year. Disclose noncash investing and financing activities in a note. any Analysis Component 2. Analyze and discuss the statement of cash flows prepared in part 1, giving special attention to the wisdom of the cash dividend payment. Long-term notes payable. 75,000 54,750 Total liabilities. 128,141 169,425 Equity Common stock, $5 par value 162,750 150,250 Paid-in capital in excess of par, common stock... 37,500 0 Retained earnings. 185,000 120,125 Total liabilities and equity. $513,391 $439,800
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Principles Of Financial Accounting (Chapters 1-17)
ISBN: 9781260780147
25th Edition
Authors: John Wild
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