Questions: Forten Company's current year Income statement, comparative balance sheets, and additional information follow. 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, and (4) all debits to Accounts Payable reflect cash payments for Inventory. Assets Cash 69,400 86,500 Accounts receivable 85,400 63,625 Inventory 295,156 264,800 Prepaid expenses 1,340 2,155 Total current assets 451,296 417,080 Equipment 144,500 121,000 Accumulated depreciation-Equipment (43,125) (52,500) Total assets 52,671 485,580 Liabilities and Equity Accounts payable 66,141 134,175 Long-term notes payable 72,400 70,350 Total liabilities 138,541 204,525 Equity Common stock, 5 par value Paid-in capital in excess of par, common stock 182,250 163,250 Paid-in capital in excess of par, common stock 174,880 117,805 Total liabilities and equity 552,671 485,580 Additional Information on Current Year Transactions a. The loss on the cash sale of equipment was 18,125 (details in b). b. Sold equipment costing 85,875, with accumulated depreciation of 43,125, for 24,625 cash. c. Purchased equipment costing 109,375 by paying 56,000 cash and signing a long-term notes payable for the balance. d. Paid 51,325 cash to reduce the long-term notes payable. e. Issued 3,800 shares of common stock for 20 cash per share. f. Declared and paid cash dividends of 52,700. Required: Prepare a complete statement of cash flows using a spreadsheet using the indirect method.
Transcript text: Forten Company's current year Income statement, comparative balance sheets, and additional information follow. 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, and
(4) all debits to Accounts Payable reflect cash payments for Inventory.
Assets
Cash $69,400 $86,500
Accounts receivable $85,400 $63,625
Inventory $295,156 $264,800
Prepaid expenses $1,340 $2,155
Total current assets $451,296 $417,080
Equipment $144,500 $121,000
Accumulated depreciation-Equipment $(43,125)$ $(52,500)$
Total assets $$52,671 $485,580
Liabilities and Equity
Accounts payable $66,141 $134,175
Long-term notes payable $72,400 $70,350
Total liabilities $138,541 $204,525
Equity
Common stock, $5 par value
Paid-in capital in excess of par, common stock $182,250 $163,250
Paid-in capital in excess of par, common stock $174,880 $117,805
Total liabilities and equity $552,671 $485,580
Additional Information on Current Year Transactions
a. The loss on the cash sale of equipment was $18,125 (details in b).
b. Sold equipment costing $85,875, with accumulated depreciation of $43,125, for $24,625 cash.
c. Purchased equipment costing $109,375 by paying $56,000 cash and signing a long-term notes payable for the balance.
d. Paid $51,325 cash to reduce the long-term notes payable.
e. Issued 3,800 shares of common stock for $20 cash per share.
f. Declared and paid cash dividends of $52,700.
Required:
Prepare a complete statement of cash flows using a spreadsheet using the indirect method.
Solution
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