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.
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.