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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.

  

FORTEN COMPANY Comparative Balance Sheets December 31, 2013 and 2012
	2013			2012
Assets
Cash	$	30,144		$	62,000
Accounts receivable		65,125			51,125
Merchandise inventory		274,906			250,800
Prepaid expenses		1,200			1,600
Equipment		142,000			100,000
Accum. depreciation—Equipment		(32,800)			(40,000)
Total assets	$	480,575		$	425,525
Liabilities and Equity
Accounts payable	$	60,075		$	108,200
Short-term notes payable		6,000			4,000
Long-term notes payable		38,175			33,000
Common stock, $5 par value		152,500			145,000
Paid-in capital in excess of par, common stock		22,500			0
Retained earnings		201,325			135,325
Total liabilities and equity	$	480,575		$	425,525

  

FORTEN COMPANY Income Statement For Year Ended December 31, 2013
Sales				$	585,000
Cost of goods sold					286,000
Gross profit					299,000
Operating expenses
Depreciation expense	$	18,000
Other expenses		140,000			158,000
Other gains (losses)
Loss on sale of equipment					(4,000)
Income before taxes					137,000
Income taxes expense					26,000
Net income				$	111,000

  

Additional Information on Year 2013 Transactions
a.	The loss on the cash sale of equipment was $4,000 (details in b).
b.	Sold equipment costing $43,300, with accumulated depreciation of $25,200, for $14,100 cash.
c.	Purchased equipment costing $85,300 by paying $40,000 cash and signing a long-term note payable for the balance.
d.	Borrowed $2,000 cash by signing a short-term note payable.
e.	Paid $40,125 cash to reduce the long-term notes payable.
f.	Issued 1,500 shares of common stock for $20 cash per share.
g.	Declared and paid cash dividends of $45,000.

  

Required:
1.	Prepare a complete statement of cash flows; report its operating activities using the indirect method.(Amounts to be deducted should be indicated with a minus sign.) Get the SOLUTION here  Accounting homeworkhelp