Accounting question ! Che M Chapter 12: Reporting Cas c Dezto.mheducation.com/hm

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Accounting question ! Che M Chapter 12: Reporting Cas c Dezto.mheducation.com/hm.tpx?-0.7496045334253186-1449892014255 Apps JPort M McGraw-Hill Conne... Please LogInMindTap Computi. aAmazon.com: DJI Ph... value 30.00 points 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 Assets Cash Accounts receivable Merchandise inventory Prepaid expenses Equipment Accum. depreciation-Equipment $ 54,534 $ 71,000 60,125 232,800 2,050 118.000 (51,700 (58,000) 77,725 261,406 1.560 160,450 Total assets $503,975 $425,975 Liabilities and Equity Accounts payable Short-term notes payable Long-term notes payable Common stock, $5 par value Paid-in capital in excess of par, common stock Retained earnings $ 58,275 110,900 5,800 42,000 149,500 9,600 25,275 166,000 49,500 195,325 117,775 Total liabilities and equity $503,975 $425,975 FORTEN COMPANY Income Statement For Year Ended December 31, 2013 Sales Cost of goods sold $630,000 304,000 326,000 Gross profit Operating expenses Depreciation expense Other expenses $ 19,800 141,500 161,300 10:47 PM 12/11/2015

Explanation / Answer

Cash Flow Statement

Particulars Amount($) Amount($) Cash Flow from Operating Activities Net Income 129,750 Add:-Depreciation Expense 19,800 Add:-Loss on Sale of Equipment 4,450 Add:-Income Tax expense 30,500 Adjustment for Working Capital:- a)Increase in Accounts Receivable (17,600) b)Increase in Inventory (28,606) c)Decrease in Prepiad Expense 490 d)Decrease in Accounts Payable (52,625) Less:-Income Tax Paid (30,500) Cash Inflow From Operating Activities 55,659 Cash Flow from Investing Activities Purchase of Equipment (61,000) Sale of Equipment 15,000 Net Cash Outflow from Investing Activities (46,000) Cash Flow from Financing Activities Repayment of Long Term Note Payable (43,725) Borrowd from Short Term Note Payable 3,800 Issue of Common Stock (3300*20) 66,000 Dividend Paid (52,200) Net Cash Outflow from Financing Activities (26,125) Net Cash Outflow during the year 16,466 Add:-Opening Cash Balance 71,000 Closing Cash Balance 54,534

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