Forten Company, a merchandiser, recently completed its calendar-year 2015 operat

Question

Forten Company, a merchandiser, recently completed its calendar-year 2015 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 income statement and balance sheets follow FORTEN COMPANY Comparative Balance Sheets December 31, 2015 and 2014 2015 2014 Assets Cash Accounts receivable Inventory Prepaid expenses $ 46,554 63,000 52,125 248,800 1,650 66,525 273,406 1,240 365,575 102,000 (34,900)(42,000) 387, 725-2 lotal current assets Equipment Accum. depreciation 144,050 Equipment Total assets $496,875 $425,575 Liabilities and Equity Accounts payable Short-term notes payable $ 59,875 $108,500 4,200 6,400 Total current liabilities Long-term notes payable 66,275 112,700 34,000 146,700 145,500 0 133,375 $496,875 $425,575 37,075 103,350 154,000 25,500 214,025 Total liabilities Equity Common stock, $5 par value Paid-in capital in excess of par, common stock Retained earnings Total liabilities and equity

Explanation / Answer

Forten company Statement of cash flows Cash flow from operating activities: Net income 126,450 Adjustments Depreciation expense 18,200 loss on sale of Equipment 4,050 Decreas in prepaid expense 410 increase in short term notes 2,200 increase in account receivable -14,400 increase in inventory -24,606 Decrease in accounts payable -48,625 63,679 Cash flow from operating activities 63,679 Cash flow from investing activities Cash from sale 14,200 Cash paid for purchase -42,000 -27,800 Cash used bu investing activities -27,800 Cash flow from financing activities cash paid for long term notes -40,525 cash dividend -45,800 stock issue 34,000 -52,325 Cash used by financing activities -52,325 net decrease -16,446 cash at beginning 63,000 Cash at the end 46,554

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