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 $ 73,900 89,930 299,656 1,370 464,856 141,500 (44,625) $ 561,731 $ 89,500 66,625 267,800 2,215 426,140 124,000 (54,000) $ 496,140 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 $ 69,141 14,800 83,941 57,000 140,941 $ 138,675 9,200 147,875 64,750 212,625 166,250 186,750 61,500 172,540 $ 561,731 117,265 $ 496, 140 $ 662,500 301,000 361,500 FORTEN COMPANY Income Statement For Current Year Ended December 31 Sales Cost of goods sold Gross profit Operating expenses Depreciation expense $36,750 Other expenses 148,400 Other gains (losses) Loss on sale of equipment Income before taxes Income taxes expense Net income 185,150 (21,125) 155, 225 46,650 $ 108,575

Answer 1

	Statement of Cash Flows - Direct Method
		Amount in $	Amount in $
	Cash flows from operating activities
	Cash receipts from customers	6,39,195.00
	Cash paid to suppliers	(4,02,390.00)
	Cash Paid for Other Expenses	(1,47,555.00)
	Cash paid for Income Tax Expenses	(46,650.00)
			$             42,600
	Net cash from operating activities		$             42,600
	Cash flows from investing activities
	Sale of Equipment	$               27,625
	Purchase of Equipment	$             -62,000
	Net cash used in investing activities		$            -34,375
	Cash flows from Financing activities
	Issue of Common Stock	$               82,000
	Payment of long term note Payable	$             -58,125
	Dividend Paid	$             -53,300
	Short Term Not Payable	$                 5,600
	Net cash used in financing activities		$            -23,825
	Net increase in cash and cash equivalents		$            -15,600
	Add :Cash and cash equivalents at beginning of period		$             89,500
	Cash and cash equivalents at end of period		$             73,900
	Working notes: 1
	Calculation of cash collection from customer
	Sales	6,62,500.00
	Add: Opening AR	66,625.00
	Less: Closing AR	89,930.00
	Cash Collected	6,39,195.00
	Working notes: 2
	Calculation of purhcase of inventory
	Cost of Goods Sold	3,01,000.00
	Add: Closing inventory	2,99,656.00
	Less : Opening Inventory	2,67,800.00
	Material Purhcased	3,32,856.00
	Calculation of amount paid to supplied
	Op. Balance of Acct Payable	1,38,675.00
	Add: Purchases	3,32,856.00
	Less: Cl. Balance of Account payable	69,141.00
	Cash paid	4,02,390.00
	Operating Expenses
	Expenses	1,48,400.00
	Difference in changes	(845.00)
		1,47,555.00