Question

Use the following information for the Problems 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 $ 61,900 $ 81,500 Accounts receivable 77,850 58,625 Inventory 287,656 259,800 Prepaid expenses 1,290 2,055 Total current assets 428,696 401,980 Equipment 149,500 116,000 Accum. depreciation- (40,625) (50,000) Equipment Total assets $ 537,571 $ 467,980 Liabilities and Equity Accounts payable $ 61,141 $126,675 Short-term notes 12,400 7,600 payable Total current 73,541 134,275 liabilities Long-term notes 61,000 56,750 payable Total liabilities 134,541 191,025 Equity Common stock, $5 par 1787 par 178,750 158,250 value Paid-in capital in excess of par, 45,5000 common stock Retained earnings 178,780 118,705 Total liabilities $ 537,571 $ 467,980 and equity

Answer 1

FORTEN COMPANY Statement of Cash Flows For year Ended December 31,2017 Cash flows from operating activities: Cash received from Customer (W.N 1) 603,275 Cash paid for Inventory (W.N 2) Cash paid for other expense (W.N 3) (386,390) (139,635) (35,450) Cash paid for Income tax Net Cash Provided By Operating Activities (a) 41,800 Cash flows from Investing activities: Cash Paid for equipment Cash received from sale of equipment Net Cash used in Investing Activites (b) (46,000) 19,625 (26,375) Cash flows from Financing activities: Cash borrowed on short-term borrowings Cash paid on long-term note Cash received from issuing stock (3,300 x 20) Cash paid for dividends 4,800 (54,125) 66,000 (51,700) (35,025) Net Cash used in Financing Activities (c) (19,600) Net Increase (Decrease) in cash (a+b+c) Cash Balance at the beginning of year 81,500 Cash Balance at the end of year 61,900

Working Notes: 1) Cash Received from the customer Account receivable as on December 31, 2016 58,625 Add: Sales during the year 2017 622,500 Less: Account receivable as on December 31, 2017 77,850 Cash Received From customer 603,275 2) Cash paid for Inventory Inventory as on December 31,2017 287,656 Add: Cost of goods sold during the year 2017 293,000 Less: Inventory as on December 31, 2016 259,800 Net Inventory Purchases during the year 320,856 Accounts payable as on December 31,2016 Add: Purhcases made during the year 2017 126,675 320,856 Less: Accounts payable as on December 31,2017 61,141 Cash Paid to suppliers 386,390 3) Cash paid for Other expense Other expenses 140,400 Add: Prepaid expenses as on December 31, 2017 1,290 Less: Prepaid expenses as on December 31, 2016 2,055 Cash Paid for interest expense 139,635