Forten Company, a merchandiser, recently completed its calendar-year 2013 operat
ID: 2466239 • Letter: F
Question
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.
The loss on the cash sale of equipment was $5,125 (details in b).
Sold equipment costing $46,875, with accumulated depreciation of $30,125, for $11,625 cash.
Purchased equipment costing $96,375 by paying $30,000 cash and signing a long-term note payable for the balance.
Borrowed $4,000 cash by signing a short-term note payable.
Paid $50,125 cash to reduce the long-term notes payable.
Issued 2,500 shares of common stock for $20 cash
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.
Explanation / Answer
Answer:
FORTEN COMPANY Statement of Cash Flows For Year Ended December 31, 2013 In $ In $ Cash flows from operating activities: Net Income 114975 Non cash expenses: Depreciation 20750 Loss on sale of equipment 5125 Increase in: Account Receivable ($65,810 - $50,625) -15185 Inventory ($275,656 - $251,800) -23856 Decrease in : prepaid expenses ($1,875 - $1,250) 625 Accounts Payble ($114,675 - $53,141) -61534 Net cash provided by operating activities 40900 Cash flows from investing activities cash obtained on sale of equipment 11625 Cash paid for purcahse of equipment -30000 Net cash used in investing activity -18375 Cash flows from financing activities Borrowed on short term note 4000 Cash paid on long tern note -50125 Cash on issuing 2500 shares @$20 50000 Cash paid on dividends -50100 Net cash used in financing activities -46225 Net increase (decrease) in cash -23700 Cash balance at beginning of year 73500 Cash balance at end of year 49800Related Questions
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