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 Prepald Expenses. FORTEN COMPANY Comparative Balance Sheets December 31 Current Year Prior Year 66,400 82,380 292,156 1,320 442,256 146,500 (42,125) $ 84,500 61,625 262,800 2,115 411,040 119,000 (51,500) $478,540 $546,631 Assets Cash Accounts receivab Inventory Prepaid expenses Total current asset Equipment Accum. depreciation-Equ 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 $ 64,141 13,300 77,441 59,500 136,941 $131,175 8,200 139,375 59,750 199,125 179.250 54,000 176,440 $546,631 161,250 0 118,165 $ 478,540 FORTEN COMPANY Income Statement For Current Year Ended December 31 Sales Cost of goods sold Gross profit Ontina Danses $637,500 296,000 341,500

Answer 1

Solution:

Statement of Cash Flows - Forten Company For the year ended Dec 31
Particulars	Details	Amount
Cash Flow from Operating Activities:
Net Income		$110,575.00
Adjustments to reconcile net income to cash flow from operating activities:
Depreciation	$31,750.00
Loss on sale of equipment	$16,125.00
Increase in Accounts Receivables ($82,380 - $61,625)	-$20,755.00
Increase in Inventory ($292,156 - $262,800)	-$29,356.00
Decrease in prepaid expenses ($2,115 - $1,320)	$795.00
Decrease in Accounts payable ($131,175 - $64,141)	-$67,034.00
Total Adjustments		-$68,475.00
Net Cash Flow From Operating Activites (A)		$42,100.00
Cash Flow from Investing Activities:
Proceed from sale of equipment	$22,625.00
Cash paid for Purchase of equipment	-$52,000.00
Net Cash Flow From Investing Activites (B)		-$29,375.00
Cash Flow from Financing Activities:
Dividend paid	-$52,300.00
Proceed from short term borrowing	$5,100.00
Cash paid for long term note	-$55,625.00
Proceed from issue of common stock	$72,000.00
Net Cash Flow From Financing Activites (C)		-$30,825.00
Total Cash flow from all activities (A+B+C)		-$18,100.00
Cash at the beginning of the year		$84,500.00
Cash at the end of year		$66,400.00
Non Cash investing & Financing Activities:
Purchase of equipment by issuing long term note		$55,375.00