Forten Company, a merchandiser, recently completed its calendar-year 2017 operations. For the year, (1) all sales...

Solution

FORTEN COMPANY
Cash Flow Statement
For the ended December 31, 2017
Cash Flow from Operating Activities:
Net Income	$     113,775.00
Adjustments to reconcile net income to net cash provided by operations:
Loss on sale of Equipment	$          8,125.00
Depreciation expense	$        23,750.00
Increase in Accounts receivables	$     (16,685.00)
Increase in Inventory	$     (25,356.00)
Decrease in prepaid expense	$              725.00
Decrease in accounts payable	$     (63,034.00)
A. Cash Flow from Operating Activities		$         41,300.00
Cash Flow from Investing Activities:
Sale of Equipment	$        14,625.00
Purchase of Equipment	$     (36,000.00)
B. Cash flow from Investing Activities		$       (21,375.00)
Cash Flow from Financing Activities:
Issue of Common Stock	$        56,000.00
Dividend paid	$     (50,700.00)
Proceeds from short term notes payable	$          4,300.00
Retirement of long term notes payable	$     (51,625.00)
C. Cash Flow from Financing Activities		$       (42,025.00)
Increase (Decrease) in cash [A+B+C]		$       (22,100.00)
Add: cash at the beginning of the year		$         76,500.00
Cash at the end of the year		$         54,400.00

.General notes for cash flow
Cash is increased when Current liability increase or Current asset Decrease.
Cash is Decreased when Current liability Decrease or Current asset Increase.
Depreciation or loss on sale of any asset is a non cash expense hence it will be added to net income to get operating cash
Profit on sale of asset or investment is a non cash profit and hence will be deducted from operating income.