Problem 12-1A Indirect: Statement of cash flows LO A1, P1, P2,P3
Forten Company, a merchandiser, recently completed itscalendar-year 2013 operations. For the year, (1) all sales arecredit sales, (2) all credits to Accounts Receivable reflect cashreceipts from customers, (3) all purchases of inventory are oncredit, (4) all debits to Accounts Payable reflect cash paymentsfor inventory, and (5) Other Expenses are paid in advance and areinitially debited to Prepaid Expenses. The companyâs balance sheetsand income statement follow.
FORTEN COMPANY
Comparative Balance Sheets
December 31, 2013 and 2012 2013 2012 Assets Cash $ 66,379 $ 70,500 Accountsreceivable 77,025 59,625 Merchandiseinventory 262,156 233,800 Prepaidexpenses 1,540 2,025 Equipment 159,425 117,000 Accum.depreciationâEquipment (50,650) (57,000) Total assets $ 515,875 $ 425,950 Liabilitiesand Equity Accountspayable $ 58,375 $ 110,750 Short-term notespayable 9,400 5,700 Long-term notespayable 25,825 41,500 Common stock, $5 parvalue 165,250 149,250 Paid-in capital inexcess of par, common stock 48,000 0 Retainedearnings 209,025 118,750 Total liabilitiesand equity $ 515,875 $ 425,950
FORTEN COMPANY
Income Statement
For Year Ended December 31, 2013 Sales $ 627,500 Cost of goodssold 303,000 Gross profit 324,500 Operatingexpenses Depreciation expense $ 19,700 Other expenses 128,050 147,750 Other gains(losses) Loss on sale ofequipment (4,425) Income beforetaxes 172,325 Income taxesexpense 30,250 Net income $ 142,075
AdditionalInformation on Year 2013 Transactions a. The loss on the cash sale of equipment was $4,425 (details inb).
b. Sold equipment costing $45,425, with accumulated depreciation of$26,050, for $14,950 cash.
c. Purchased equipment costing $87,850 by paying $60,000 cash andsigning a long-term note payable for the balance.
d. Borrowed $3,700 cash by signing a short-term note payable.
e. Paid $43,525 cash to reduce the long-term notes payable.
f. Issued 3,200 shares of common stock for $20 cash per share.
g. Declared and paid cash dividendsof $51,800.
Required: 1. Prepare a complete statement of cash flows; report its operatingactivities using the indirect method.
Problem 12-1A Indirect: Statement of cash flows LO A1, P1, P2,P3
Forten Company, a merchandiser, recently completed itscalendar-year 2013 operations. For the year, (1) all sales arecredit sales, (2) all credits to Accounts Receivable reflect cashreceipts from customers, (3) all purchases of inventory are oncredit, (4) all debits to Accounts Payable reflect cash paymentsfor inventory, and (5) Other Expenses are paid in advance and areinitially debited to Prepaid Expenses. The companyâs balance sheetsand income statement follow. |
| FORTEN COMPANY Comparative Balance Sheets December 31, 2013 and 2012 | |||||
| 2013 | 2012 | ||||
| Assets | |||||
| Cash | $ | 66,379 | $ | 70,500 | |
| Accountsreceivable | 77,025 | 59,625 | |||
| Merchandiseinventory | 262,156 | 233,800 | |||
| Prepaidexpenses | 1,540 | 2,025 | |||
| Equipment | 159,425 | 117,000 | |||
| Accum.depreciationâEquipment | (50,650) | (57,000) | |||
| Total assets | $ | 515,875 | $ | 425,950 | |
| Liabilitiesand Equity | |||||
| Accountspayable | $ | 58,375 | $ | 110,750 | |
| Short-term notespayable | 9,400 | 5,700 | |||
| Long-term notespayable | 25,825 | 41,500 | |||
| Common stock, $5 parvalue | 165,250 | 149,250 | |||
| Paid-in capital inexcess of par, common stock | 48,000 | 0 | |||
| Retainedearnings | 209,025 | 118,750 | |||
| Total liabilitiesand equity | $ | 515,875 | $ | 425,950 | |
| FORTEN COMPANY Income Statement For Year Ended December 31, 2013 | |||||
| Sales | $ | 627,500 | |||
| Cost of goodssold | 303,000 | ||||
| Gross profit | 324,500 | ||||
| Operatingexpenses | |||||
| Depreciation expense | $ | 19,700 | |||
| Other expenses | 128,050 | 147,750 | |||
| Other gains(losses) | |||||
| Loss on sale ofequipment | (4,425) | ||||
| Income beforetaxes | 172,325 | ||||
| Income taxesexpense | 30,250 | ||||
| Net income | $ | 142,075 | |||
| AdditionalInformation on Year 2013 Transactions | |
| a. | The loss on the cash sale of equipment was $4,425 (details inb). |
| b. | Sold equipment costing $45,425, with accumulated depreciation of$26,050, for $14,950 cash. |
| c. | Purchased equipment costing $87,850 by paying $60,000 cash andsigning a long-term note payable for the balance. |
| d. | Borrowed $3,700 cash by signing a short-term note payable. |
| e. | Paid $43,525 cash to reduce the long-term notes payable. |
| f. | Issued 3,200 shares of common stock for $20 cash per share. |
| g. | Declared and paid cash dividendsof $51,800. |
| Required: | |
| 1. | Prepare a complete statement of cash flows; report its operatingactivities using the indirect method. |
Related questions
Forten Company, a merchandiser, recently completed itscalendar-year 2013 operations. For the year, (1) all sales arecredit sales, (2) all credits to Accounts Receivable reflect cashreceipts from customers, (3) all purchases of inventory are oncredit, (4) all debits to Accounts Payable reflect cash paymentsfor inventory, and (5) Other Expenses are paid in advance and areinitially debited to Prepaid Expenses. The companyâs balance sheetsand income statement follow. |
| FORTEN COMPANY Comparative Balance Sheets December 31, 2013 and 2012 | ||||||
| 2013 | 2012 | |||||
| Assets | ||||||
| Cash | $ | 49,000 | $ | 73,000 | ||
| Accountsreceivable | 65,860 | 50,000 | ||||
| Merchandiseinventory | 275,500 | 252,000 | ||||
| Prepaidexpenses | 1,250 | 1,500 | ||||
| Equipment | 157,500 | 107,000 | ||||
| Accum.depreciationâEquipment | (29,625) | (40,000) | ||||
| Total assets | $ | 519,485 | $ | 443,500 | ||
| Liabilitiesand Equity | ||||||
| Accountspayable | $ | 62,510 | $ | 115,000 | ||
| Short-term notespayable | 10,000 | 7,000 | ||||
| Long-term notespayable | 62,500 | 48,750 | ||||
| Common stock, $5 parvalue | 162,250 | 150,500 | ||||
| Paid-in capital inexcess of par, common stock | 35,250 | 0 | ||||
| Retainedearnings | 186,975 | 122,250 | ||||
| Total liabilitiesand equity | $ | 519,485 | $ | 443,500 | ||
| FORTEN COMPANY Income Statement For Year Ended December 31, 2013 | |||||
| Sales | $ | 583,500 | |||
| Cost of goodssold | 284,000 | ||||
| Gross profit | 299,500 | ||||
| Operatingexpenses | |||||
| Depreciation expense | $ | 20,000 | |||
| Other expenses | 132,800 | 152,800 | |||
| Other gains(losses) | |||||
| Loss on sale ofequipment | (5,375) | ||||
| Income beforetaxes | 141,325 | ||||
| Income taxesexpense | 25,500 | ||||
| Net income | $ | 115,825 | |||
| AdditionalInformation on Year 2013 Transactions | |
| a. | The loss on the cash sale of equipment was $5,375 (details inb). |
| b. | Sold equipment costing $47,250, with accumulated depreciation of$30,375, for $11,500 cash. |
| c. | Purchased equipment costing $97,750 by paying $30,000 cash andsigning a long-term note payable for the balance. |
| d. | Borrowed $3,000 cash by signing a short-term note payable. |
| e. | Paid $54,000 cash to reduce the long-term notes payable. |
| f. | Issued 2,350 shares of common stock for $20 cash per share. |
| g. | Declared and paid cash dividendsof $51,100. |
| Required: | |
Prepare a complete statement of cash flows; report its operatingactivities according to the direct method.( |
Forten Company, a merchandiser, recently completed itscalendar-year 2015 operations. For the year, (1) all sales arecredit sales, (2) all credits to Accounts Receivable reflect cashreceipts from customers, (3) all purchases of inventory are oncredit, (4) all debits to Accounts Payable reflect cash paymentsfor inventory, and (5) Other Expenses are paid in advance and areinitially debited to Prepaid Expenses. The companyâs incomestatement and balance sheets follow. |
| FORTEN COMPANY Comparative Balance Sheets December 31, 2015 and 2014 | |||||
2015 | 2014 | ||||
| Assets | |||||
| Cash | $ | 70,944 | $ | 72,000 | |
| Accountsreceivable | 79,125 | 61,125 | |||
| Inventory | 259,906 | 230,800 | |||
| Prepaidexpenses | 1,600 | 2,100 | |||
| Total currentassets | 411,575 | 366,025 | |||
| Equipment | 162,500 | 120,000 | |||
| Accum.depreciationâEquipment | (53,800) | (60,000) | |||
| Total assets | $ | 520,275 | $ | 426,025 | |
| Liabilitiesand Equity | |||||
| Accountspayable | $ | 58,075 | $ | 111,200 | |
| Short-term notespayable | 10,000 | 6,000 | |||
| Total currentliabilities | 68,075 | 117,200 | |||
| Long-term notespayable | 24,175 | 43,000 | |||
| Totalliabilities | 92,250 | 160,200 | |||
| Equity | |||||
| Common stock, $5 par value | 167,500 | 150,000 | |||
| Paid-in capital in excess of par, common stock | 52,500 | 0 | |||
| Retained earnings | 208,025 | 115,825 | |||
| Total liabilitiesand equity | $ | 520,275 | $ | 426,025 | |
| FORTEN COMPANY Income Statement For Year Ended December 31, 2015 | |||||
| Sales | $ | 635,000 | |||
| Cost of goodssold | 306,000 | ||||
| Gross profit | 329,000 | ||||
| Operatingexpenses | |||||
| Depreciation expense | $ | 20,000 | |||
| Other expenses | 128,300 | 148,300 | |||
| Other gains(losses) | |||||
| Loss on sale ofequipment | (4,500) | ||||
| Income beforetaxes | 176,200 | ||||
| Income taxesexpense | 31,000 | ||||
| Net income | $ | 145,200 | |||
| AdditionalInformation on Year 2015 Transactions | |
| a. | The loss on the cash sale of equipment was $4,500 (details inb). |
| b. | Sold equipment costing $45,800, with accumulated depreciation of$26,200, for $15,100 cash. |
| c. | Purchased equipment costing $88,300 by paying $63,000 cash andsigning a long-term note payable for the balance. |
| d. | Borrowed $4,000 cash by signing a short-term note payable. |
| e. | Paid $44,125 cash to reduce the long-term notes payable. |
| f. | Issued 3,500 shares of common stock for $20 cash per share. |
| g. | Declared and paid cash dividendsof $53,000. |
| Required: | |
| 1. | Prepare a complete statement of cash flows; report its operatingactivities using the indirect method. (Amounts to bededucted should be indicated with a minus sign.) |
Use the following information for the Problems below.
Forten Company, a merchandiser, recently completed itscalendar-year 2017 operations. For the year, (1) all sales arecredit sales, (2) all credits to Accounts Receivable reflect cashreceipts from customers, (3) all purchases of inventory are oncredit, (4) all debits to Accounts Payable reflect cash paymentsfor inventory, and (5) Other Expenses are paid in advance and areinitially debited to Prepaid Expenses. The companyâs incomestatement and balance sheets follow.
| FORTEN COMPANY Comparative Balance Sheets December 31, 2017 and 2016 | |||||||
| 2017 | 2016 | ||||||
| Assets | |||||||
| Cash | $ | 60,400 | $ | 80,500 | |||
| Accounts receivable | 76,340 | 57,625 | |||||
| Inventory | 286,156 | 258,800 | |||||
| Prepaid expenses | 1,280 | 2,035 | |||||
| Total current assets | 424,176 | 398,960 | |||||
| Equipment | 150,500 | 115,000 | |||||
| Accum.depreciationâEquipment | (40,125 | ) | (49,500 | ) | |||
| Total assets | $ | 534,551 | $ | 464,460 | |||
| Liabilities andEquity | |||||||
| Accounts payable | $ | 60,141 | $ | 125,175 | |||
| Short-term notes payable | 12,100 | 7,400 | |||||
| Total current liabilities | 72,241 | 132,575 | |||||
| Long-term notes payable | 61,500 | 55,750 | |||||
| Total liabilities | 133,741 | 188,325 | |||||
| Equity | |||||||
| Common stock, $5 par value | 176,750 | 157,250 | |||||
| Paid-in capital in excess ofpar, common stock | 44,500 | 0 | |||||
| Retained earnings | 179,560 | 118,885 | |||||
| Total liabilities andequity | $ | 534,551 | $ | 464,460 | |||
| FORTEN COMPANY Income Statement For Year Ended December 31, 2017 | ||||||
| Sales | $ | 617,500 | ||||
| Cost of goods sold | 292,000 | |||||
| Gross profit | 325,500 | |||||
| Operating expenses | ||||||
| Depreciation expense | $ | 27,750 | ||||
| Other expenses | 139,400 | 167,150 | ||||
| Other gains (losses) | ||||||
| Loss on sale of equipment | (12,125 | ) | ||||
| Income before taxes | 146,225 | |||||
| Income taxes expense | 34,050 | |||||
| Net income | $ | 112,175 | ||||
Additional Information on Year 2017Transactions
The loss on the cash sale of equipment was $12,125 (details inb).
Sold equipment costing $67,875, with accumulated depreciation of$37,125, for $18,625 cash.
Purchased equipment costing $103,375 by paying $44,000 cash andsigning a long-term note payable for the balance.
Borrowed $4,700 cash by signing a short-term note payable.
Paid $53,625 cash to reduce the long-term notes payable.
Issued 3,200 shares of common stock for $20 cash per share.
Declared and paid cash dividends of $51,500.
Problem 16-5AB Direct: Statement of cash flows LO P1,P3, P5
Required:
Prepare a complete statement of cash flows; report its operatingactivities according to the direct method.
