Sorry,to clarify the parts under analysis of change is what I\'m having problems
ID: 2445424 • Letter: S
Question
Sorry,to clarify the parts under analysis of change is what I'm having problems with the steps.
Pr Problem 12-2AA Indirect: Cash flows spreadsheet LO P1, P2, P3, P4
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 2012
Assets
Cash $49,600 $73,500
Accounts receivable 65,810 60,000
Merchandise inventory 277,500 252,000
Prepaid expenses 1,500 1,900
Equipment 157,000 108,000
Accum. depreciation—Equipment (36,125) (46,000)
Total assets $515,285 $449,400
FORTEN COMPANY
Income Statement
For Year Ended December 31, 2013
Sales $584,500
Cost of goods sold 284,000
Gross profit 300,500
Operating expenses
Depreciation expense $20,000
Other expenses 133,600 153,600
Other gains (losses)
Loss on sale of equipment (5,750)
Income before taxes 141,150
Income taxes expense 24,250
Net income $116,900
Additional Information on Year 2013 Transactions
a. Net income was $116,900.
b. Accounts receivable increased.
c. Merchandise inventory increased.
d. Prepaid expenses decreased.
e. Accounts payable decreased.
f. Depreciation expense was $20,000.
g. Sold equipment costing $47,250, with accumulated depreciation of $29,875, for $11,625 cash. This yielded a loss of $5,750.
h. Purchased equipment costing $96,250 by paying $35,000 cash and (i.) by signing a long-term note payable for the balance.
j. Borrowed $4,000 cash by signing a short-term note payable.
k. Paid $39,250 cash to reduce the long-term notes payable.
l. Issued 2,450 shares of common stock for $20 cash per share.
m. Declared and paid cash dividends of $51,700.
FORTEN COMPANY
SPREADSHEET FOR STATEMENT OF CASH FLOWS
FOR YEAR ENDED DECEMBER 31, 2013
ANALYSIS OF CHANGES
31-Dec-12 Debit Credit 31-Dec-13
Balance sheet-debits balance accounts
Cash $73,500 $ $ $49,600
Accounts receivable $60,000 $ $ $
Mechandise inventory $252,000 $ $ $
Prepaid expenses $1,900 $ $ $
Equipment $108,000 $ $ $
$495,400 $ $ $
Balance Sheet Credit balance accounts
Accumulated depreciation-Equipment $46,000 $ $ $
Accounts payable $113,000 $ $ $
Short-term notes payable $8,000 $ $ $
Long-term notes payable $48,000 $ $ $
Common stock, $5 par value $150,000 $ $ $
Paid-in capital in excess of par value, common stock $0 $ $ $
Retained earnings $130,400 $ $ $
$495,400
Explanation / Answer
Answer: Cash flow statement:
Cash flows from operating activities: Net income 116,900 Items to reconcile net income to cash flows from operating activities Depreciation expense 20,000 Loss on sale of equipment 5,750 Increase in accounts receivable -5,810 Increase in merchandise inventory -25,500 Decrease in prepaid expenses 400 Decrease in accounts payable -74,315 Increase in short-term notes payable 4,000 Net cash flows from operating activities 41,425 Cash flows for investing activities: Cash received from sale of equipment 11,625 Cash used to purchase equipment -35,000 Net cash flows for investing activities -23,375 Cash flows for financing activities: Cash received from issuance of common stock 49,000 Cash used to pay long-term note payable -39,250 Cash used to pay dividends -51,700 Net cash flows for financing activities -41,950 Net decrease in cash -23,900 Cash balance on January 1 73,500 Cash balance on December 31 49,600Related Questions
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