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 $ 49,800 73,500 50,625 275,656 251,800 1,875 65,810 1,250 Total current assets Equipment Accum. depreciation-Equipment 392,516 377,800 157,500 108,000 (36,625) (46,000) Total assets 513,391 439,800 Liabilities and Equity Accounts payable Short-term notes payable $ 53,141 114,675 6,000 10,000 Total current liabilities Long-term notes payable 63,141 120,675 48,750 65,000 Total liabilities Equity Common stock, $5 par value Paid-in capital in excess of par, common stock Retained eamings 128,141 169,425 162,750 150,250 185,000 120,125 $ 513,391 439,800 37,500 Total liabilities and equity

Explanation / Answer

Solution:

Preparing the Complete Statement of Cash Flows, Reporting its Operating Activities Using the Indirect Method:

FORTEN COMPANY

Statement of Cash Flows

For Year Ended December 31, 2015

FORTEN COMPANY

Statement of Cash Flows

For Year Ended December 31, 2015

Cash flows from operating activities: Net Income $114,975 Adjustments to reconcile net income to net cash provided by operations: Depreciation expense $20,750 Accounts receivable increase ($15,185) Inventory increase ($23,856) Prepaid expense decrease $625 Accounts payable decrease ($61,534) Loss on disposal of equipment $5,125 Net cash provided by operating activities $40,900 Cash flows from investing activities: Cash paid for equipment ($30,000) Cash received from sale of equipment $11,625 Net cash used in investing activities ($18,375) Cash flows from financing activities: Cash borrowed on short-term note $4,000 Cash paid on long-term note ($50,125) Cash received from issuing stock $50,000 Cash paid for dividends ($50,100) Net cash used in financing activities ($46,225) Net increase (decrease) in cash ($23,700) Cash balance at beginning of year $73,500 Cash balance at end of year $49,800

Related Questions

Navigate

• Browse (All)
• Browse F
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.