Accounting 202 Two Problems - Forten Company& GOLDEN CORPORATION

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 company’s balance sheets and income statement follow.

FORTEN COMPANY Comparative Balance Sheets December 31, 2013 and 2012

  2013 2012

  Assets

  Cash $ 49,200 $ 73,000

  Accounts receivable 65,890 57,000

  Merchandise inventory 276,500 253,000

  Prepaid expenses 1,250 1,900

  Equipment 158,000 106,500

  Accum. depreciation—Equipment (36,500) (46,000)

  Total assets $ 514,340 $ 445,400

  Liabilities and Equity

  Accounts payable $ 63,590 $ 111,000

  Short-term notes payable 10,000 6,000

  Long-term notes payable 62,500 48,250

  Common stock, $5 par value 162,250 150,750

  Paid-in capital in excess of par, common stock 34,500 0

  Retained earnings 181,500 129,400

  Total liabilities and equity $ 514,340 $ 445,400

FORTEN COMPANY Income Statement For Year Ended December 31, 2013

  Sales $ 582,500

  Cost of goods sold 289,000

  Gross profit 293,500

  Operating expenses

       Depreciation expense $ 20,000

       Other expenses 134,000 154,000