Question

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 Prepaid Expenses.

FORTEN COMPANY Comparative Balance Sheets December 31
	Current Year						Prior Year
Assets
Cash		$	63,400					$	82,500
Accounts receivable			79,360						59,625
Inventory			289,156						260,800
Prepaid expenses			1,300						2,075
Total current assets			433,216						405,000
Equipment			148,500						117,000
Accum. depreciation—Equipment			(41,125	)					(50,500	)
Total assets		$	540,591					$	471,500
Liabilities and Equity
Accounts payable		$	62,141					$	128,175
Short-term notes payable			12,700						7,800
Total current liabilities			74,841						135,975
Long-term notes payable			60,500						57,750
Total liabilities			135,341						193,725
Equity
Common stock, $5 par value			176,250						159,250
Paid-in capital in excess of par, common stock			51,000						0
Retained earnings			178,000						118,525
Total liabilities and equity		$	540,591					$	471,500

  

FORTEN COMPANY Income Statement For Current Year Ended December 31
Sales				$	627,500
Cost of goods sold					294,000
Gross profit					333,500
Operating expenses
Depreciation expense	$	29,750
Other expenses		141,400			171,150
Other gains (losses)
Loss on sale of equipment					(14,125	)
Income before taxes					148,225
Income taxes expense					36,850
Net income				$	111,375

Additional Information on Current Year Transactions

1. The loss on the cash sale of equipment was $14,125 (details in b).
2. Sold equipment costing $73,875, with accumulated depreciation of $39,125, for $20,625 cash.
3. Purchased equipment costing $105,375 by paying $48,000 cash and signing a long-term note payable for the balance.
4. Borrowed $4,900 cash by signing a short-term note payable.
5. Paid $54,625 cash to reduce the long-term notes payable.
6. Issued 3,400 shares of common stock for $20 cash per share.
7. Declared and paid cash dividends of $51,900.

Problem 16-4AA Indirect: Cash flows spreadsheet LO P4

Required:
Prepare a complete statement of cash flows using a spreadsheet using the indirect method. (Enter all amounts as positive values.)

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Answer 1

Cashflow Statement

Cashflow from Operating Activities:	$	$
Net Income Before Taxes	148,225
Loss on sale of equipment added back	14125
Depreciation	29750
Changes in Working Capital
Accounts Receivable	-19735
Inventory	-28,356
Prpeaid expenses	+775
Accounts Payable	-66034
Short term notes	+4900
Taxes Paid	-36850
Total Cashflow from Operating Activities:		46,800
Cashflow from Investing activities
Sale of equipment	20,625
Purchase of equipment ( cash)	-48,000
Total Cashflow from Investing Activities:		-27,375
Cashflow from Financing Activities:
Long term debt paid	-54625
Common stock issued (176259+51000-159250)	68000
Dividends Paid	-51900
Total Cashflow from Financing Activities:		-38,525
Total Cashflows during the year		-19,100
Add: Opening Cash balances		82,500
Closing Balance		63,400