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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.)


Paper#76820 | Written in 18-Jul-2015

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