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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
Other gains (losses)
Loss on sale of equipment (5,500)
Income before taxes 134,000
Income taxes expense 25,500
Net income $ 108,500
Additional Information on Year 2013 Transactions
a. Net income was $108,500.
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 $46,500, with accumulated depreciation of $29,500, for $11,500 cash. This yielded a loss of $5,500.
h. Purchased equipment costing $98,000 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 $53,750 cash to reduce the long-term notes payable.
l. Issued 2,300 shares of common stock for $20 cash per share.
m. Declared and paid cash dividends of $56,400.
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.)
Golden Corp., a merchandiser, recently completed its 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, (5) Other Expenses are all cash expenses, and (6) any change in Income Taxes Payable reflects the accrual and cash payment of taxes. The company’s balance sheets and income statement follow.
hiododf CORPORATION
Comparative Balance Sheets
December 31, 2013 and 2012
2013 2012
Assets
Cash $ 163,000 $ 135,000
Accounts receivable 84,000 72,000
Merchandise inventory 625,000 515,000
Equipment 345,000 269,000
Accum. depreciation—Equipment (156,000) (103,000)
Total assets $ 1,061,000 $888,000
Liabilities and Equity
Accounts payable $ 164,000 $ 103,000
Income taxes payable 26,000 23,000
Common stock, $2 par value 590,000 568,000
Paid-in capital in excess of par value, common stock 197,000 164,000
Retained earnings 84,000 30,000
Total liabilities and equity $ 1,061,000 $ 888,000
GOLDEN CORPORATION
Income Statement
For Year Ended December 31, 2013
Sales $ 1,800,000
Cost of goods sold 1,088,000
Gross profit 712,000
Operating expenses
Depreciation expense $ 53,000
Other expenses 499,000 552,000
Income before taxes 160,000
Income taxes expense 21,000
Net income $ 139,000
Additional Information on Year 2013 Transactions
a. Purchased equipment for $76,000 cash.
b. Issued 11,000 shares of common stock for $5 cash per share.
c. Declared and paid $85,000 in cash dividends.
Required:
Prepare a complete statement of cash flows; report its cash inflows and cash outflows from operating activities according to the indirect method. (Amounts to be deducted should be indicated with a minus sign.)
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