Forten Company, a merchandiser, recently completed its calendar-year 2015 operat
ID: 2475932 • Letter: F
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.
2015
2014
The loss on the cash sale of equipment was $4,050 (details in b).
Sold equipment costing $43,550, with accumulated depreciation of $25,300, for $14,200 cash.
Purchased equipment costing $85,600 by paying $42,000 cash and signing a long-term note payable for the balance.
Borrowed $2,200 cash by signing a short-term note payable.
Paid $40,525 cash to reduce the long-term notes payable.
Issued 1,700 shares of common stock for $20 cash per share.
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, 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.
Explanation / Answer
Answer:1
Forten Company Statement of cash flow For the Year Ended December 31, 2015 Cash flows from operating activities: Net income 126450 Items to reconcile net income to cash flows from operating activities Depreciation expense 18200 Loss on sale of equipment 4050 Increase in accounts receivable -14400 Increase in merchandise inventory -24606 Decrease in prepaid expenses 410 Decrease in accounts payable -48625 Increase in short-term notes payable 2200 Net cash flows from operating activities 63679 Cash flows for investing activities: Cash received from sale of equipment 14200 Cash used to purchase equipment -42000 Net cash flows for investing activities -27800 Cash flows for financing activities: Cash received from issuance of common stock 34000 Cash used to pay long-term note payable -40525 Cash used to pay dividends -45800 Net cash flows for financing activities -52325 Net decrease in cash -16446 Cash balance on January 1 63000 Cash balance on December 31 46554Related Questions
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