Forten Company, a merchandiser, recently completed its calendar-year 2013 operations. For the year, (1) all sales...

 

 
 

Transcribed Image Text:

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 company's balance sheets and income statement follow. FORTEN COMPANY Comparative Balance Sheets December 31, 2013 and 2012 2013 2012 Assets Cash $ 49,800 $ 73,500 Accounts receivable Merchandise inventory Prepaid expenses Equipment Accum. depreciation-Equipment 65,810 50,625 251,800 1,875 108,000 (46,000) 275,656 1,250 157,500 (36,625) S 513,391 $ 439,800 Total assets Liabilities and Equity Accounts payable Short-term notes payable Long-term notes payable Common stock, $5 par value Paid-in capital in excess of par, common stock 53,141 10,000 65,000 162,750 $ 114,675 6,000 48,750 150,250 37,500 Retained earnings 185,000 120,125 Total liabilities and equity $ 513,391 $ 439,800 FORTEN COMPANY Income Statement For Year Ended December 31, 2013 $582,500 285,000 Sales Cost of goods sold Gross profit Operating expenses Depreciation expense Other expenses 297,500 $ 20,750 132,400 153,150 Other gains (losses) Loss on sale of equipment (5,125) Income before taxes 139,225 Income taxes expense 24,250 Net income $114,975 Additional Information on Year 2013 Transactions a. Net income was $114,975. b. Accounts receivable increased. c. Merchandise 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. I. Issued 2,500 shares of common stock for $20 cash per share. m. Declared and paid cash dividends of $50,100. Required: 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, 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 company's balance sheets and income statement follow. FORTEN COMPANY Comparative Balance Sheets December 31, 2013 and 2012 2013 2012 Assets Cash $ 49,800 $ 73,500 Accounts receivable Merchandise inventory Prepaid expenses Equipment Accum. depreciation-Equipment 65,810 50,625 251,800 1,875 108,000 (46,000) 275,656 1,250 157,500 (36,625) S 513,391 $ 439,800 Total assets Liabilities and Equity Accounts payable Short-term notes payable Long-term notes payable Common stock, $5 par value Paid-in capital in excess of par, common stock 53,141 10,000 65,000 162,750 $ 114,675 6,000 48,750 150,250 37,500 Retained earnings 185,000 120,125 Total liabilities and equity $ 513,391 $ 439,800 FORTEN COMPANY Income Statement For Year Ended December 31, 2013 $582,500 285,000 Sales Cost of goods sold Gross profit Operating expenses Depreciation expense Other expenses 297,500 $ 20,750 132,400 153,150 Other gains (losses) Loss on sale of equipment (5,125) Income before taxes 139,225 Income taxes expense 24,250 Net income $114,975 Additional Information on Year 2013 Transactions a. Net income was $114,975. b. Accounts receivable increased. c. Merchandise 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. I. Issued 2,500 shares of common stock for $20 cash per share. m. Declared and paid cash dividends of $50,100. Required: Prepare a complete statement of cash flows using a spreadsheet; report its operating activities using the indirect method. (Enter all amounts as positive values.)

Answer rating: 100% (QA)

Forten Company Statement of Cash Flows For the Year Ended December 31 2013 Cash flows from oper... View the full answer