[The following information applies to the questions displayed below. Forten Comp

Question

[The following information applies to the questions displayed 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 FORTEN COMPANY Comparative Balance Sheets December 31, 2017 and 2016 2017 2016 Assets Cash Accounts receivable Inventory Prepaid expenses Total current assets Equipment Accum. depreciation-Equipment Total assets $ 76,900 91,500 68,625 269,800 1,390 2,255 432,180 126,000 (55,000 $567,771 $503,180 92,950 302,656 473,896 139,500 (45,625 Liabilities and Equity Accounts payable Short-term notes payable Total current liabilities Long-term notes payable Total liabilities Equity Common stock, $5 par value Paid-in capital in excess of par, common stock Retained earnings $ 71,141 $141,675 9,600 151,275 56,00066,750 218,025 15,400 86,541 142,541 198,750 168,250 55,500 170,980116,905 $567,771 $503,180 Total 1iabilities and equity

Explanation / Answer

FORTEN COMPANY Statement of Cashflows   For the year Ended December 31, 2017 Cash flows from operating activities Net Income $ 107,775 Adjustments to reconcile net income to : Depreciation expense $   38,750 Loss on sale of equipment $   23,125 Increase in accounts receivable $ (24,325) 68625-92950 Increase in inventory $ (32,856) 269800-302656 Decrease in prepaid expenses $         865 2255-1390 Decrease in accounts payable $ (70,534) 71141-141675 $ (64,975) Net cash flow from operating activities $    42,800 Cash flows from investing activities Cash paid for Purchase of equipment $ (66,000) Cash received from sale of equipment $   29,625 Net cash used for investing activities $ (36,375) Cash flows from financing activities Cash paid for dividend $ (53,700) Repayment of long term note $ (59,125) Proceeds from short term notes $      5,800 Cash received from issue of shares $   86,000 4300*20 Net cash flow used by financing activities $ (21,025) Net Decrease in cash and cash equivalents $ (14,600) Cash and cash equivalents at beginning of period $    91,500 Cash and cash equivalents at end of period $    76,900 Non cash investing and financing activities Issued long term note for equipment $    48,375 114375-66000

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