I don\'t understand. How does the answer fit in with the statement of cash flows
ID: 2445457 • Letter: I
Question
I don't understand. How does the answer fit in with the statement of cash flows, anaylsis of change? With the additional information problem added, how would it fit/breakdown under Dec 31, 2012--Debit--Credits--Dec 31, 2013, the last part of the question? You have the "balance sheet-debit balance accounts" and "Balance sheet-credit balance accounts". Sorry, the attachment is a little screwed, but to clarify the parts under analysis of change is what I'm having problems with the steps.
Pr Problem 12-2AA Indirect: Cash flows spreadsheet LO P1, P2, P3, P4 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 $49,600 $73,500
Accounts receivable 65,810 60,000
Merchandise inventory 277,500 252,000
Prepaid expenses 1,500 1,900
Equipment 157,000 108,000
Accum. depreciation—Equipment (36,125) (46,000)
Total assets $515,285 $449,400
FORTEN COMPANY
Income Statement For Year
Ended December 31, 2013
Sales $584,500
Cost of goods sold 284,000
Gross profit 300,500
Operating expenses
Depreciation expense $20,000
Other expenses 133,600 153,600
Other gains (losses)
Loss on sale of equipment (5,750)
Income before taxes 141,150
Income taxes expense 24,250
Net income $116,900
Additional Information on Year 2013 Transactions
a. Net income was $116,900.
b. Accounts receivable increased.
c. Merchandise inventory increased.
d. Prepaid expenses decreased.
e. Accounts payable decreased.
f. Depreciation expense was $20,000.
g. Sold equipment costing $47,250, with accumulated depreciation of $29,875, for $11,625 cash. This yielded a loss of $5,750.
h. Purchased equipment costing $96,250 by paying $35,000 cash and (i.) by signing a long-term note payable for the balance.
j. Borrowed $4,000 cash by signing a short-term note payable.
k. Paid $39,250 cash to reduce the long-term notes payable.
l. Issued 2,450 shares of common stock for $20 cash per share.
m. Declared and paid cash dividends of $51,700.
FORTEN COMPANY SPREADSHEET
FOR STATEMENT OF CASH FLOWS
FOR YEAR ENDED DECEMBER 31, 2013
ANALYSIS OF CHANGES 31-Dec-12 Debit Credit 31-Dec-13
Balance sheet-debits balance accounts
Cash $73,500 $ $ $49,600
Accounts receivable $60,000 $ $ $
Mechandise inventory $252,000 $ $ $
Prepaid expenses $1,900 $ $ $
Equipment $108,000 $ $ $
$495,400 $ $ $
Balance Sheet Credit balance accounts
Accumulated depreciation-Equipment $46,000 $ $ $
Accounts payable $113,000 $ $ $
Short-term notes payable $8,000 $ $ $
Long-term notes payable $48,000 $ $ $
Common stock, $5 par value $150,000 $ $ $
Paid-in capital in excess of par value, common stock $0 $ $ $
Retained earnings $130,400 $ $ $
$495,400
Explanation / Answer
since you have not provided complete figures i am giving you the analysis of which parts goes where as desired
Net income $116,900
+ Non cash expenses depreciation 20,000
+ loss on sale of equipmetn 5,750
- Accounts recievable decreaed (5,810)
- Merchandise inventory (25,500)
+ prepaid expneses 400
+ short term note payable increase 4,000
- Decrease in accounts payable ----------
Net cash flow from operating activiites -----------
Net cash flow from investing activities
cash purcahse of euipmetn ($35,000)
cash recieved on equipmetn 11,625
Net cash flow from investing activities --------------
Net cash flow from investing activites
Long tern note cash apid (39,250)
dividend paid (51,700)
shares issued 49,000
net cash flow from financing actovities -----------
net increase/ decrease in cash -----------
Add: cash at beginning 73,500
Cash at the end $49,600
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