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Prepare a complete statement of cash flows using the direct method. (Amounts to be deducted should be indicated with a minus sign.)
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.

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Cash balance December 31, 2013 is $70,944 the required answer for the given question.

What is Comparative balance sheet?

The financial status of an organisation throughout several time periods for which comparison is done or is necessary is shown on a comparative balance sheet.

Forten Company

Statement of Cash Flows

For the year ended December 31, 2013

Cash flow from operating activities:

Net income                                          $145,200

Adjustments to net income:

+ Depreciation expense $20,000

+ Loss on sale of equipment $4,500

+ Decrease in prepaid expenses $500

- Increase in accounts receivable $18,000

- Increase in merchandise inventory $29,106

- Decrease in accounts payable $53,125              -$75,231

From operating operations, net cash flow              $69,969

Cash flow from investing activities:

income from the selling of equipment                   $15,100

cash outflow from equipment purchases             -$63,000

Net cash flow generated from investments            -$47,900

Cash flow from financing activities:

income from the sale of common shares            $70,000

Flow of funds from the bank's short-term payable notes     $4,000

Bank's short-term notes payable cash outflow   -$44,125

Cash outflow from dividends                         -$53,000

Net cash flow from operating transactions             -$23,125

Net cash decrease                                   -$1,056

Cash balance December 31, 2012                       $72,000

Cash balance December 31, 2013                       $70,944

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