Forten Company a merchandiser recently completed its calenda

Forten Company, a merchandiser, recently completed its calendar-year 2017 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.

Additional Information on Year 2017 Transactions

The loss on the cash sale of equipment was $20,125 (details in b).

Sold equipment costing $91,875, with accumulated depreciation of $45,125, for $26,625 cash.

Purchased equipment costing $111,375 by paying $60,000 cash and signing a long-term note payable for the balance.

Borrowed $5,500 cash by signing a short-term note payable.

Paid $57,625 cash to reduce the long-term notes payable.

Issued 4,000 shares of common stock for $20 cash per share.

Declared and paid cash dividends of $53,100.

Required:
1. Prepare a complete statement of cash flows; report its operating activities using the indirect method. (Amounts to be deducted should be indicated with a minus sign.)

FORTEN COMPANY

Statement of Cash Flows

For Year Ended December 31, 2017

Cash flows from operating activities

not attempted

Adjustments to reconcile net income to net cash provided by operations:

not attempted

Cash flows from investing activities

not attempted

Cash flows from financing activities:

not attempted

Net increase (decrease) in cash

Cash balance at beginning of year

not attempted

Cash balance at end of year

FORTEN COMPANY Comparative Balance Sheets December 31, 2017 and 2016
	2017		2016
Assets
Cash	$	72,400		$	88,500
Accounts receivable		88,420			65,625
Inventory		298,156			266,800
Prepaid expenses		1,360			2,195
Total current assets		460,336			423,120
Equipment		142,500			123,000
Accum. depreciation—Equipment		(44,125	)		(53,500	)
Total assets	$	558,711		$	492,620
Liabilities and Equity
Accounts payable	$	68,141		$	137,175
Short-term notes payable		14,500			9,000
Total current liabilities		82,641			146,175
Long-term notes payable		57,500			63,750
Total liabilities		140,141			209,925
Equity
Common stock, $5 par value		192,750			165,250
Paid-in capital in excess of par, common stock		52,500			0
Retained earnings		173,320			117,445
Total liabilities and equity	$	558,711		$	492,620

STATEMENT OF CASH FLOW Amount in $ Amount in $ Net income $ 1,08,975 Cash flows from operating activities Adjustments for: Depreciation of the year $ 35,750 Loss on sale of Equipment $ 20,125 $ 55,875 Effects/ changes in Assets & Liabilities (Increase) / Decrease in Account receivables $ -22,795 Inventory Decrease / (Increase) $ -31,356 Prepaid Expenses $ 835 Accounts payable Increase / ( Decrese) $ -69,034 $ -1,22,350 Net cash from operating activities $ 42,500 Cash flows from investing activities Purchase of Equipment $ -60,000 Sale of Equipment $ 26,625 Net cash used in investing activities $ -33,375 Cash flows from Financing activities Issue of Common Stock $ 80,000 Short Term Note Payalbe Amt Borrowed $ 5,500 Long Term Note $ -57,625 Dividend Paid $ -53,100 Net cash used in financing activities $ -25,225 Net increase in cash and cash equivalents $ -16,100 Add :Cash and cash equivalents at beginning of period $ 88,500 Cash and cash equivalents at end of period $ 72,400 CALCULATION OF LOSS ON SALE OF PLANT Purchase Value $ 91,875 Less: Accumulated Depreciation $ 45,125 Book Value of Equipment $ 46,750 Less : Sale Value of Equipment $ 26,625 Loss on Sale of Equipmet = $ 20,125

Forten Company a merchandiser recently completed its calenda

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