Forten Company, a merchandiser, recently completed its calendar-year 2013 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. The company's balance sheets and income statement follow.
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FORTEN COMPANY
Comparative Balance Sheets
December 31, 2013 and 2012
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2013
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2012
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Assets
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Cash
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$
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49,600
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$
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73,500
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Accounts receivable
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65,890
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54,000
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Merchandise inventory
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277,000
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252,000
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Prepaid expenses
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1,250
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1,700
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Equipment
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157,500
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107,000
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Accum. depreciation-Equipment
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(36,375)
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(46,000)
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Total assets
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$
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514,865
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$
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442,200
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Liabilities and Equity
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Accounts payable
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$
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51,790
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$
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113,000
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Short-term notes payable
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9,000
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6,000
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Long-term notes payable
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62,500
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48,500
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Common stock, $5 par value
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162,500
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150,750
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Paid-in capital in excess of par, common stock
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35,250
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0
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Retained earnings
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193,825
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123,950
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Total liabilities and equity
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$
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514,865
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$
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442,200
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FORTEN COMPANY
Income Statement
For Year Ended December 31, 2013
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Sales
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$
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584,500
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Cost of goods sold
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281,000
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Gross profit
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303,500
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Operating expenses
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Depreciation expense
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$
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20,000
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Other expenses
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132,800
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152,800
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Other gains (losses)
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Loss on sale of equipment
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(5,625)
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Income before taxes
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145,075
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Income taxes expense
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23,000
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Net income
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$
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122,075
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Additional Information on Year 2013 Transactions
a. Net income was $122,075.
b. Accounts receivable increased.
c. Merchandise inventory increased.
d. Prepaid expenses decreased.
e. Accounts payable decreased.
f. Depreciation expense was $20,000.
g. Sold equipment costing $46,875, with accumulated depreciation of $29,625, for $11,625 cash. This yielded a loss of $5,625.
h. Purchased equipment costing $97,375 by paying $35,000 cash and (i.) by signing a long-term note payable for the balance.
j. Borrowed $3,000 cash by signing a short-term note payable.
k. Paid $48,375 cash to reduce the long-term notes payable.
l. Issued 2,350 shares of common stock for $20 cash per share.
m. Declared and paid cash dividends of $52,200.
Required:
Prepare a complete statement of cash flows using a spreadsheet; report its operating activities using the indirect method. (Enter all amounts as positive values.)
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FORTEN COMPANY
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Spreadsheet for Statement of Cash Flows
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For Year Ended December 31, 2013
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Analysis of Changes
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December 31, 2012
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Debit
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Credit
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December 31, 2013
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Balance sheet-debit balance accounts
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Cash
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$73,500
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$49,600
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Accounts receivable
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54,000
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11,890
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65,890
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Merchandise inventory
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252,000
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25,000
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277,000
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Prepaid expenses
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1,700
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450
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1,250
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Equipment
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107,000
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$488,200
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$393,740
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Balance sheet-credit balance accounts
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Accumulated depreciation-Equipment
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$46,000
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Accounts payable
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113,000
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61,210
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51,790
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Short-term notes payable
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6,000
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3,000
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9,000
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Long-term notes payable
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48,500
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Common stock, $5 par value
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150,750
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11,750
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162,500
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Paid-in capital in excess of par value, common stock
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0
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35,250
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35,250
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Retained earnings
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123,950
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$488,200
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$258,540
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