Question

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 $ 78,400 94, 460 304,156 1,400 478,416 138,500 (46,125) $570,791 $ 92,500 69,625 270,800 2,275 435,200 127,000 (55,500) $506, 700 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, 55 par value Paid-in capital in excess of par, common stock Retained earnings Total liabilities and equity $ 72,141 15,700 87,841 55,500 143,341 $143,175 9,800 152,975 67,750 220,725 169,250 200, 750 56.500 170,200 $570,791 116,725 $506,700 $677,500 304,000 373,500 PORTEN COMPANY Income Statement Yor Year Ended December 31, 2017 Sales Cost of goods sold Gross profit Operating expenses Depreciation expense $ 39,750 Other expenses 151.400 Other gains (Losses) Loss on sale of equipment Income before taxes Income taxes expense Net income 191,150 (24, 125) 18.225 50.850 $107,375 Additional Information on Year 2017 Transactions

Answer 1

Cash flow indirect method
Cash flow from operating activities
Net income		107375
Adjustments to reconcile the net income
Depreciation and Amortization expense	39750
Loss on sale of equipmeny	24125
Changes in current asset and liabilities
decrease in accounts receivable	-24835
Increase in inventory	-33356
Decrease in prepaid expense	875
Increase in accounts payable	-71034
Increase in short term notes payable	5900
		-58575
Cash generated from operations		48800
Cash flow from Investing activities
Equipment sold	30625
Land sold
Equipment purchased	-68000
Cash flow from Investing activities		-37375

	Cash flow from Financing activities
	Paid in capital in excess	66000
	Common stock	22000
	Long term notes payable	-59625
	Dividend paid	-53900
	Cash flow from Financing activities		-25525
	Net Cash and cash equivalent		-14100
Add	Beginning cash and cash equivalent		92500
	Ending cash and cash equivalent		78400