Accounting 202 Two Problems - Forten Company& GOLDEN CORPORATION

Problem 12-2AA Indirect: Cash flows spreadsheet LO P1, P2, P3, P4

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 $ 49,200      $ 73,000  
  Accounts receivable   65,890        57,000  
  Merchandise inventory   276,500        253,000  
  Prepaid expenses   1,250        1,900  
  Equipment   158,000        106,500  
  Accum. depreciation—Equipment   (36,500)       (46,000) 
  
  
  Total assets $ 514,340      $ 445,400  
  
  
  Liabilities and Equity         
  Accounts payable $ 63,590      $ 111,000  
  Short-term notes payable   10,000        6,000  
  Long-term notes payable   62,500        48,250  
  Common stock, $5 par value   162,250        150,750  
  Paid-in capital in excess of par, common stock   34,500        0  
  Retained earnings   181,500        129,400  
  
  
  Total liabilities and equity $ 514,340      $ 445,400  

FORTEN COMPANY Income Statement For Year Ended December 31, 2013
  Sales       $ 582,500 
  Cost of goods sold         289,000 
        
  Gross profit         293,500 
  Operating expenses         
       Depreciation expense $ 20,000       
       Other expenses   134,000       154,000 
  
    
  Other gains (losses)         
       Loss on sale of equipment         (5,500)
        
  Income before taxes         134,000 
  Income taxes expense         25,500 
        
  Net income       $ 108,500 
        
Additional Information on Year 2013 Transactions

a. Net income was $108,500.
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 $46,500, with accumulated depreciation of $29,500, for $11,500 cash. This yielded a loss of $5,500.
h. Purchased equipment costing $98,000 by paying $30,000 cash and (i.) by signing a long-term note payable for the balance.
j. Borrowed $4,000 cash by signing a short-term note payable.
k. Paid $53,750 cash to reduce the long-term notes payable.
l. Issued 2,300 shares of common stock for $20 cash per share.
m. Declared and paid cash dividends of $56,400.

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.)

 

Golden Corp., a merchandiser, recently completed its 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, (5) Other Expenses are all cash expenses, and (6) any change in Income Taxes Payable reflects the accrual and cash payment of taxes. The company’s balance sheets and income statement follow.

hiododf CORPORATION
Comparative Balance Sheets
December 31, 2013 and 2012
2013 2012
Assets 
Cash $ 163,000 $ 135,000 
Accounts receivable 84,000 72,000 
Merchandise inventory 625,000 515,000 
Equipment 345,000 269,000 
Accum. depreciation—Equipment (156,000) (103,000) 

Total assets $ 1,061,000 $888,000 

Liabilities and Equity 
Accounts payable $ 164,000 $ 103,000 
Income taxes payable 26,000 23,000 
Common stock, $2 par value 590,000 568,000 
Paid-in capital in excess of par value, common stock 197,000 164,000 
Retained earnings 84,000 30,000 

Total liabilities and equity $ 1,061,000 $ 888,000 


GOLDEN CORPORATION
Income Statement
For Year Ended December 31, 2013
Sales $ 1,800,000 
Cost of goods sold 1,088,000 

Gross profit 712,000 
Operating expenses 
Depreciation expense $ 53,000 
Other expenses 499,000 552,000 
Income before taxes 160,000 
Income taxes expense 21,000 
Net income $ 139,000 

Additional Information on Year 2013 Transactions
a. Purchased equipment for $76,000 cash.
b. Issued 11,000 shares of common stock for $5 cash per share.
c. Declared and paid $85,000 in cash dividends.

Required:
Prepare a complete statement of cash flows; report its cash inflows and cash outflows from operating activities according to the indirect method. (Amounts to be deducted should be indicated with a minus sign.)

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    Accounting 202 Two Problems - Forten Company& GOLDEN CORPORATION

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