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Please see pdf file. Forten Company, a merchandiser, recently completed its calendar-year 2008 operations.

Please see pdf file.
Forten Company, a merchandiser, recently completed its calendar-year 2008 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. Forten's balance sheets and income statement follow:
FORTEN COMPANY
Comparative Balance Sheets
December 31, 2008 and 2007
2008 2007
Assets
Cash $ 49,800 $ 73,500
Accounts receivable 65,810 50,625
Merchandise inventory 275,656 251,800
Prepaid expenses 1,250 1,875
Equipment 157,500 108,000
Accum. depreciation-Equipment (36,625) (46,000)
Total assets $513,391 $439,800
Liabilities and Equity
Accounts payable $ 53,141 $114,675
Short-term notes payable 10,000 6,000
Long-term notes payable 65,000 48,750
Common stock, $5 par value 162,750 150,250
Paid-in capital in excess of par, common stock 37,500 0
Retained earnings 185,000 120,125
Total liabilities and equity $513,391 $439,800
FORTEN COMPANY
Income Statement
For Year Ended December 31, 2008
Sales $582,500
Cost of goods sold 285,000
Gross profit 297,500
Operating expenses
Depreciation expense $ 20,750
Other expenses 132,400 153,150
Other gains (losses)
Loss on sale of equipment 5,125
Income before taxes $139,125
Income taxes expense 24,250
Net income $114,975
Additional Information on Year 2008 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 $96,375 by paying $30,000 cash and signing a long-term note payable for the
balance.
d. Borrowed $4,000 cash by signing a short-term note payable.
e. 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:
Prepare a complete statement of cash flows; report its operating activities using the indirect method.

Problem 12-1A: Statement of cash flows (indirect method) L.O. C2, C3, A1, P1, P2, P3
Forten Company, a merchandiser, recently completed its calendar-year 2008 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. Forten's balance sheets and income statement follow:
FORTEN COMPANY
Comparative Balance Sheets
December 31, 2008 and 2007
2008 2007
Assets
Cash $ 49,800 $ 73,500
Accounts receivable 65,810 50,625
Merchandise inventory 275,656 251,800
Prepaid expenses 1,250 1,875
Equipment 157,500 108,000
Accum. depreciation--Equipment (36,625 ) (46,000 )
Total assets $513,391 $439,800
Liabilities and Equity
Accounts payable $ 53,141 $114,675
Short-term notes payable 10,000 6,000
Long-term notes payable 65,000 48,750
Common stock, $5 par value 162,750 150,250
Paid-in capital in excess of par, common stock 37,500 0
Retained earnings 185,000 120,125
Total liabilities and equity $513,391 $439,800
FORTEN COMPANY
Income Statement
For Year Ended December 31, 2008
Sales $582,500
Cost of goods sold 285,000
Gross profit 297,500
Operating expenses
Depreciation expense $ 20,750
Other expenses 132,400 153,150
Other gains (losses)
Loss on sale of equipment 5,125
Income before taxes $139,125
Income taxes expense 24,250
Net income $114,975
Additional Information on Year 2008 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 $96,375 by paying $30,000 cash and signing a long-term note payable for the
balance.
d. Borrowed $4,000 cash by signing a short-term note payable.
e. 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 $50,100.
Required:
Prepare a complete statement of cash flows; report its operating activities using the indirect method. (Negative
amount should be indicated by a minus sign. Omit the "$" sign in your response.)
FORTEN COMPANY
Statement of Cash Flows
For Year Ended December 31, 2008
Cash flows from operating activities
Net income $ 114975
Adjustments to reconcile net income to net cash provided by
operating activities:
Accounts receivable
Inventory
Prepaid expenses
Accounts payable
20750
Net cash provided by operating activities $
Cash flows from investing activities
Net cash used in investing activities
Cash flows from financing activities
Net cash used in financing activities
$
Cash balance at December 31, 2007
Cash balance at December 31, 2008 $

This question was asked on May 16, 2010.

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