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 COMPA Comparative Balance Sheets December 31, 2015 and 2014 2015 Assets Cash S 39,274 S 65,000 54, 125 244,800 1,750 69,325 270,408 Prepaid expenses 1,320 Total current assets Equipment Accum. depreciation-Equipment 380,325 148,150 (39,100 (46,000) 108,000 Total assets S 489,375 425,675 Liabilities and Equity Accounts payable Short-term notes payable S 59,475 7,200 109,100 4,600 Total current liabilities Long-term notes payable 86,675 34,875 113,700 38,000 Total liabilities Equity Common stock, $5 par value Paid-in capital in excess of par, common stock Retained earnings 149,700 31,500146,500 199,325 157,000 129,475 Total liabilities and equity 489,375 425,875

Explanation / Answer

Net Income $ 1,17,250.00 Adjustments for reconciling net income to operating cash flow Depreciation (206-172) $     18,600.00 Loss on sale of equipment $       4,150.00 Decrease in prepaid expense (1750-1320) $           430.00 Increase in short term notes payable (7200-4600) $       2,600.00 Increase in accounts receivable (69325-54125) $   -15,200.00 Increase in inventory (270406-244800) $   -25,606.00 Decrease in accounts payable (109100-59475) $   -49,625.00 Net Cash provided by operating activities $     52,599.00 Investing Activites sale of equipment $     14,400.00 Purchase of equipment $   -46,000.00 Net cash used in investing activities $   -31,600.00 Financing Activities Repayment of notes payable $   -41,325.00 Issue of common stock $     42,000.00 payment of dividend $   -47,400.00 Net cash used in Financing Activities $   -46,725.00 Net decrease in cash $   -25,726.00 Add: beginning balance $     65,000.00 Ending balance $     39,274.00 Notes payable Beginning balance $ 36,000.00 Issue against equipment $ 40,200.00 $ 76,200.00 Less: ending balance $ 34,875.00 Repayment $ 41,325.00

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