Question

Required information (The following information applies to the questions displayed below.) Forten Company's current year income statement, comparative balance sheets, and additional information follow. 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. FORTEN COMPANY Comparative Balance Sheets December 31 Current Year Prior Year $ 57,400 73,320 283, 156 1,260 415, 136 152,500 (39, 125) $ 528,511 $ 78,500 55,625 256,800 1,995 392,920 113,000 (48,500) $ 457,420 Assets Cash Accounts receivable Inventory Prepaid expenses Total current assets Equipment Accum. depreciation-Equipment Total assets 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 Total liabilities and equity $ 58,141 11,500 69,641 62,500 132, 141 $ 122, 175 7,000 129, 175 53,750 182,925 155, 250 170,250 45,000 181,120 $528,511 119,245 $457,420

Answer 1

	Dec 31, Prior Year	Debit	Credit	Dec 31, Current Year
Balance Sheet-Debit
Cash	$    78,500.00		$        21,100.00	$         57,400.00
Accounts Receivable	$    55,625.00	$        17,695.00		$         73,320.00
Inventory	$ 2,56,800.00	$        26,356.00		$      2,83,156.00
Prepaid Expense	$      1,995.00		$             735.00	$            1,260.00
Equipment	$ 1,13,000.00	$     1,01,375.00	$        61,875.00	$      1,52,500.00
	$ 5,05,920.00			$      5,67,636.00
Balance sheet-Credit
Accumulated Depreciation	$    48,500.00	$        35,125.00	$        25,750.00	$         39,125.00
Accounts Payable	$ 1,22,175.00	$        64,034.00		$         58,141.00
Short term nOtes Payable	$      7,000.00		$          4,500.00	$         11,500.00
Long term nOtes Payable	$    53,750.00	$        52,625.00	$        61,375.00	$         62,500.00
Common Stock	$ 1,55,250.00		$        15,000.00	$      1,70,250.00
Paid in capital in excess of par	$                  -		$        45,000.00	$         45,000.00
Retained Earnings	$ 1,19,245.00	$        51,100.00	$     1,12,975.00	$      1,81,120.00
	$ 5,05,920.00			$      5,67,636.00

Cash Flow Statement
Indirect Method
Cash flow from Operating Activities
Net Income		$     1,12,975.00
Adjustments
Depreciation	$    25,750.00
Loss on sale of Equipment	$    10,125.00
Change In current assets & Liabilities
Increase in Accounts Receivable	$ -17,695.00			=55625-73320
Increase in inventories	$ -26,356.00			=256800-283156
Decrease in Prepaid Expenses	$         735.00			=1995-1260
Decrease in Accounts payable	$ -64,034.00			=58141-122175
Total Adjustments		$      -71,475.00
Cash from operating activities			$        41,500.00
Cash flow from Investing Activities
Sale of Equipment		$        16,625.00
Cash paid for Purchase of Equipment		$      -40,000.00
Cash used in investing activities			$      -23,375.00
Cash flow from Financing Activities
Issue of Common stock		$        60,000.00		=3000*20
Borrowed on short term note		$          4,500.00
Repaid Long term notes payable		$      -52,625.00
Dividend Paid		$      -51,100.00
Cash from financing activities			$      -39,225.00
Net Increase in cash			$      -21,100.00
Opening Balance of Cash			$        78,500.00
Closing Balance of Cash			$        57,400.00
Non Cash Investing and Financing Activities
Purchase of Equipment by issuing notes payable			$        61,375.00