Forten Assignment

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 $ 34,709 $ 63,500

Accounts receivable 67,225 52,625

Merchandise inventory 272,656 247,800

Prepaid expenses 1,260 1,675

Equipment 145,075 103,000

Accum. depreciation—Equipment (35,950) (43,000)

Total assets $ 484,975 $ 425,600

Liabilities and Equity

Accounts payable $ 59,775 $ 108,650

Short-term notes payable 6,600 4,300

Long-term notes payable 36,525 34,500

Common stock, $5 par value 154,750 145,750

Paid-in capital in excess of par, common stock 27,000 0

Retained earnings 200,325 132,400

Total liabilities and equity $ 484,975 $ 425,600

FORTEN COMPANY

Income Statement

For Year Ended December 31, 2013

Sales $ 592,500

Cost of goods sold 289,000

Gross profit 303,500

Operating expenses

Depreciation expense $ 18,300

Other expenses 140,250 158,550

Other gains (losses)

Loss on sale of equipment (4,075)

Income before taxes 140,875

Income taxes expense 26,750

Net income $ 114,125

Additional Information on Year...