Have problems with the steps on solving.

Problem 12-2AA Indirect: Cash flows spreadsheet LO P1, P2, P3, P4

Forten Company, a merchandiser, recently completed its calendar-year 2013 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 companys balance sheets and income statement follow.

FORTEN COMPANY

Comparative Balance Sheets

December 31, 2013 and 2012 2013 2012

Assets

Cash $ 49,600 $ 73,500

Accounts receivable 65,810 60,000

Merchandise inventory 277,500 252,000

Prepaid expenses 1,500 1,900

Equipment 157,000 108,000

Accum. depreciationEquipment (36,125) (46,000)

Total assets $ 515,285 $ 449,400

Liabilities and Equity

Accounts payable $ 38,685 $ 113,000

Short-term notes payable 12,000 8,000

Long-term notes payable 70,000 48,000

Common stock, $5 par value 162,250 150,000

Paid-in capital in excess of par, common stock 36,750 0

Retained earnings 195,600 130,400

Total liabilities and equity $ 515,285 $ 449,400

FORTEN COMPANY

Income Statement

For Year Ended December 31, 2013

Sales $ 584,500

Cost of goods sold 284,000

Gross profit 300,500

Operating expenses

Depreciation expense $ 20,000

Other expenses 133,600 153,600

Other gains (losses)

Loss on sale of equipment (5,750)

Income before taxes 141,150

Income taxes expense 24,250

Net income $ 116,900

Additional Information on Year 2013 Transactions

a. Net income was $116,900.

b. Accounts receivable increased.

c. Merchandise inventory increased.

d. Prepaid expenses decreased.

e. Accounts payable decreased.

f. Depreciation expense was $20,000.

g. Sold equipment costing $47,250, with accumulated depreciation of $29,875, for $11,625 cash. This yielded a loss of $5,750.

h. Purchased equipment costing $96,250 by paying $35,000 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 $39,250 cash to reduce the long-term notes payable.

l. Issued 2,450 shares of common stock for $20 cash per share.

m. Declared and paid cash dividends of $51,700.

Prepare a complete statement of cash flows using a spreadsheet; report its operating activities using the indirect method. (Enter all amounts as positive values.)

FORTEN COMPANY

Spreadsheet for Statement of Cash Flow

For Year Ended December 31, 2013

Analysis of Changes

December 31, 2012 Debit Credits December 31, 2013

Balance sheet-debits balance account

Cash 73,500 49,600

Account receivables 60,000

Merchandise Inventory 252,000

Prepaid expenses 1,900

Equipment 108,000

$495,400 $

Balance sheet-credits balance account

Accumulated Depreciation-Equipment $46,000

Account payable 113,000

Short-term notes payable 8,000

Long-term notes payable 48,000

Common Stock, $5 par value 150,000

Paid-in capital in excess of par value 0

command stock

Retain earnings 130,400

$495,400

Statement of cash flow

Operating activities

Net income

Increase in Account receivables

Increase in Merchandise Inventory

Decrease in Prepaid expenses

Decrease in account payables

Depreciation expense

Loss on sale of equipment

Investing activities

Receipt from sale of equipment

Payment to purchase equipment

Financing activities

Borrowed on Short-term note

Payment on Long-term note

Issued common stock for cash

Payments of cash dividends

Non cash investing and financing activities

Purchase of equipment financed by long-term

payable