Question

FORTEN COMPANY Comparative Balance Sheets December 31
	Current Year						Prior Year
Assets
Cash		$	58,900					$	79,500
Accounts receivable			74,830						56,625
Inventory			284,656						257,800
Prepaid expenses			1,270						2,015
Total current assets			419,656						395,940
Equipment			151,500						114,000
Accum. depreciation—Equipment			(39,625	)					(49,000	)
Total assets		$	531,531					$	460,940
Liabilities and Equity
Accounts payable		$	59,141					$	123,675
Short-term notes payable			11,800						7,200
Total current liabilities			70,941						130,875
Long-term notes payable			62,000						54,750
Total liabilities			132,941						185,625
Equity
Common stock, $5 par value			171,750						156,250
Paid-in capital in excess of par, common stock			46,500						0
Retained earnings			180,340						119,065
Total liabilities and equity		$	531,531					$	460,940

  

FORTEN COMPANY Income Statement For Current Year Ended December 31
Sales				$	612,500
Cost of goods sold					291,000
Gross profit					321,500
Operating expenses
Depreciation expense	$	26,750
Other expenses		138,400			165,150
Other gains (losses)
Loss on sale of equipment					(11,125	)
Income before taxes					145,225
Income taxes expense					32,650
Net income				$	112,575

Additional Information on Current Year Transactions

1. The loss on the cash sale of equipment was $11,125 (details in b).
2. Sold equipment costing $64,875, with accumulated depreciation of $36,125, for $17,625 cash.
3. Purchased equipment costing $102,375 by paying $42,000 cash and signing a long-term note payable for the balance.
4. Borrowed $4,600 cash by signing a short-term note payable.
5. Paid $53,125 cash to reduce the long-term notes payable.
6. Issued 3,100 shares of common stock for $20 cash per share.
7. Declared and paid cash dividends of $51,300.

FORTEN COMPANY
Spreadsheet for Statement of Cash Flows
For Current Year Ended December 31
		Analysis of Changes
	December 31, Prior Year	Debit	Credit	December 31, Current Year
Balance sheet—debit
Cash	$79,500			$58,900
Accounts receivable	56,625
Inventory	257,800
Prepaid expenses	2,015
Equipment	114,000
	$509,940			$58,900
Balance sheet—credit
Accumulated depreciation—Equipment	$49,000
Accounts payable	123,675
Short-term notes payable	7,200
Long-term notes payable	54,750
Common stock, $5 par value	156,250
Paid-in capital in excess of par value, common stock	0
Retained earnings	119,065
	$509,940			$0
Statement of cash flows
Operating activities
Investing activities
Financing activities
Non cash investing and financing activities
Purchase of equipment financed by long-term note payable
		$0	$0

Answer 1