Forten company statement of cash flows

Problem 16-1A Indirect: Statement Of Cash Flows - FORTEN COMPANY

Problem 16-1A Indirect: Statement of cash flows LO A1, P1, P2, P3

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 $ 63,909 $ 68,500
Accounts receivable 74,225 57,625
Merchandise inventory 265,156 237,800
Prepaid expenses 1,460 1,925
Equipment 155,325 113,000
Accum. depreciation—Equipment (46,450) (53,000)


Total assets $ 513,625 $ 425,850


Liabilities and Equity
Accounts payable $ 58,775 $ 110,150
Short-term notes payable 8,600 5,300
Long-term notes payable 33,025 39,500
Common stock, $5 par value 162,250 148,250
Paid-in capital in excess of par, common stock 42,000 0
Retained earnings 208,975 122,650


Total liabilities and equity $ 513,625 $ 425,850



FORTEN COMPANY
Income Statement
For Year Ended December 31, 2013
Sales $ 617,500
Cost of goods sold 299,000

Gross profit 318,500
Operating expenses
Depreciation expense $ 19,300
Other expenses 129,100 148,400


Other gains (losses)
Loss on sale of equipment (4,325)

Income before taxes 165,775
Income taxes expense 29,250

Net income $ 136,525


Additional Information on Year 2013 Transactions
a.
The loss on the cash sale of equipment was $4,325 (details in b).

b.
Sold equipment costing $44,925, with accumulated depreciation of $25,850, for $14,750 cash.

c.
Purchased equipment costing $87,250 by paying $51,000 cash and signing a long-term note payable for the balance.

d.
Borrowed $3,300 cash by signing a short-term note payable.

e.
Paid $42,725 cash to reduce the long-term notes payable.

f.
Issued 2,800 shares of common stock for $20 cash per share.

g. Declared and paid cash dividends of $50,200.

Required:
1.
Prepare a complete statement of cash flows; report its operating activities using the indirect method.(Amounts to be deducted should be indicated with a minus sign.)