Question

Additional Information on Year 2017 Transactions a. The loss on the cash sale of equipment was $5,125 (details in b). b. Sold equipment costing $46.875, with accumulated depreciation of $30.125, for $11.625 cash. c. Purchased equipment costing S96.375 by paying S30.000 cash and signing a long-term note payable for the balance. d. Borrowed $4,000 cash by signing a short-term note payable .Paid $50.125 cash to reduce the long-term notes payable f. Issued 2,500 shares of common stock for $20 cash per share. g. Declared and paid cash dividends of $50,100. Required 1. Prepare a complete statement of cash flows; report its operating activities using the indivect method. Disclose any noncash investing and financing activities in a note.

Answer 1

Forten Company Statement of Cash Flows For the year ended December 31, 2017
Cash Flows from Operating Activities	$	$
Net Income		114,975
Adjustments to reconcile net income to net cash flows from operating activities
Depreciation Expense	20,750
Loss on sale of equipment	5,125
Increase in accounts receivable	(15,185)
Increase in inventory	(23,856)
Decrease in prepaid expenses	625
Decrease in accounts payable	(61,534)
Increase in short term notes payable	4,000	(70,075)
Net cash flows from Operating Activities		44,900
Cash Flows from Investing Activities
Proceeds from Sale of Equipment	11,625
Cash paid for Purchase of Equipment	(30,000)
Net cash used in Investing Activities		(18,375)
Cash Flows from Financing Activities
Cash paid to retire long term note payable	(50,125)
Cash from issuance of common stock	50,000
Cash dividends paid	(50,100)
Net cash used in Financing Activities		(50,225)
Net decrease in cash		(23,700)
Cash balance at the beginning of the year		73,500
Cash balance at the end of the year		49,800
Non-cash Investing and Financing Activities
Issuance of Long Term Note Payable for Purchase of Equipment		66,375