problem 16 - 3A indirect: statement of a cash flow LO A1, P1, P2, P3 Required in

Question

problem 16 - 3A indirect: statement of a cash flow LO A1, P1, P2, P3

Required information Use the following information for the Problems below. 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

Explanation / Answer

STATEMENT OF CASH FLOWS Cash flows from operating activities: Net income 114175 Adjustments to reconcile net income to net cash profived by operations: Depreciation expense 22750 Loss on sale of equipment 7125 Increase in accounts receivable = 68810-52625 = -16185 Increase in inventory = 278656-253800 = -24856 Decrease in prepaid expenses = 1995-1270 = 725 Decrease in accounts payable = 117675-55141 = -62534 -72975 Net cash provided by operating activities 41200 Cash flows from investing activities: Cash received from sale of equipment 13625 Purchase of equipment -34000 Net cash used in investing activities -20375 Cash flows from financing activities: Cash from short term note 4200 Cash paid on long term note -51125 Cash paid for dividends -50500 Cash received from issue of stock 54000 Net cash used in financing activities -43425 Net increase (decrease) in cash -22600 Cash balance at beginning of year 75500 Cash balance at end of year 52900

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