Required:
Prepare a complete statement of cash flows using a spreadsheet;
report its operating activities using the indirect method.
(Enter all amounts as positive values.)
Please use the indirect method
Required information
Use the following information for the Problems below.
[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 | $ | 51,400 | $ | 74,500 | |||
Accounts receivable | 67,310 | 51,625 | |||||
Inventory | 277,156 | 252,800 | |||||
Prepaid expenses | 1,300 | 2,025 | |||||
Total current assets | 397,166 | 380,950 | |||||
Equipment | 156,500 | 109,000 | |||||
Accum. depreciation—Equipment | (37,125 | ) | (46,500 | ) | |||
Total assets | $ | 516,541 | $ | 443,450 | |||
Liabilities and Equity | |||||||
Accounts payable | $ | 54,141 | $ | 116,175 | |||
Short-term notes payable | 10,300 | 6,200 | |||||
Total current liabilities | 64,441 | 122,375 | |||||
Long-term notes payable | 64,500 | 49,750 | |||||
Total liabilities | 128,941 | 172,125 | |||||
Equity | |||||||
Common stock, $5 par value | 164,750 | 151,250 | |||||
Paid-in capital in excess of par, common stock | 38,500 | 0 | |||||
Retained earnings | 184,350 | 120,075 | |||||
Total liabilities and equity | $ | 516,541 | $ | 443,450 | |||
FORTEN COMPANY Income Statement For Year Ended December 31, 2017 |
||||||
Sales | $ | 587,500 | ||||
Cost of goods sold | 286,000 | |||||
Gross profit | 301,500 | |||||
Operating expenses | ||||||
Depreciation expense | $ | 21,750 | ||||
Other expenses | 133,400 | 155,150 | ||||
Other gains (losses) | ||||||
Loss on sale of equipment | (6,125 | ) | ||||
Income before taxes | 140,225 | |||||
Income taxes expense | 25,650 | |||||
Net income | $ | 114,575 | ||||
Problem 12-4AA Indirect: Cash flows spreadsheet LO P1, P2, P3, P4
Additional Information on Year 2017 Transactions
|
Solution
Forten company
spreadsheet for statement of cash flows:
December 31,2016 | Debit | Credit | December 31,2017 | |||
Balance sheet -debits | ||||||
Cash | 74500 | 51400 | ||||
Account receivable | 51625 | (b) | 15685 | 67310 | ||
Inventory | 252800 | (c) | 24356 | 277156 | ||
Prepaid expenses | 2025 | (d) | 725 | 1300 | ||
Equipment | 109000 | (h) | 97375 | (g) | 49875 | 156500 |
489950 | 553666 | |||||
Balance sheet-credits | ||||||
Accum.depreciation-equipment | 46500 | (g) | 31,125 | (f) | 21750 | 37125 |
Account payable | 116175 | (e) | 62034 | 54141 | ||
Short-term notes payable | 6200 | (j) | 4100 | 10300 | ||
Long-term notes payable | 49750 | (k) | 50625 | (i) | 65375 | 64500 |
Common stock, $5 par value | 151250 | (l) | 13500 | 164750 | ||
Paid in capital in excess of par value, common stock | 0 | (l) | 38500 | 38500 | ||
Retained earnings | 120075 | (m) | 50300 | (a) | 114575 | 184350 |
489950 | 553666 | |||||
Statement of cash flows | ||||||
Operating activities | ||||||
Net income | (a) | 114575 | ||||
Increase in account receivable | (b) | 15685 | ||||
Increase in merchandise inventory | (c) | 24356 | ||||
Decrease in prepaid expenses | (d) | 725 | ||||
Decrease in account payable | (e) | 62034 | ||||
Depreciation expense | (f) | 21750 | ||||
Loss on sale of equipment | (g) | 6125 | ||||
Investing activities | ||||||
Receipt from sale of equipment | (g) | 12625 | ||||
Payment to purchase equipment | (h) | 32000 | ||||
Financing activities: | ||||||
Borrowed on short term note | (j) | 4100 | ||||
Payment on long term note | (k) | 50625 | ||||
Issued common stock for cash | (l) | 52000 | ||||
Payment of cash dividends | (m) | 50300 | ||||
Noncash investing and financing activities | ||||||
Purchase of equipment financed by long term note payable | (i) |
65375 (97375-32000) |
(h) | 65375 | ||
608775 | 608775 | |||||
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