Forten Company, a merchandiser, recently completed its calendar-year 2016 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 income statement and balance sheets follow.
FORTEN COMPANY
Income Statement
For Year Ended December 31, 2016

FORTEN COMPANY
Comparative Balance Sheets
December 31, 2016 and 2015

Additional Information on Year 2016 Transactions
a. The loss on the cash sale of equipment was $5,125 (details in b).
b. Sold equipment costing $46,875, with accumulated depreciation of $30,125, for $11,625 cash.
c. Purchased equipment costing $96,375 by paying $30,000 cash and signing a long-term note payable for the balance.
d. Borrowed $4,000 cash by signing a short-term note payable.
e. Paid $50,125 cash to reduce the long-term notes payable.
f. Issued 2,500 shares of common stock for $20 cash per share.
g. Declared and paid cash dividends of $50,100.
Required
1. Prepare a complete statement of cash flows; report its operating activities using the indirect method.
Disclose any noncash investing and financing activities in a note.
Analysis Component
2. Analyze and discuss the statement of cash flows prepared in part 1, giving special attention to the wisdom of the cash dividend payment?

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$582,500 285,000 297,500 pre.. .. Depreciation expense $20,750 Other expenses Other gains (losses (5.125) 139,225 24,250 $114,975 Net income 2016 2015 Assets Cash.. Accounts receivable... 65,810 50,625 1250 1,875 Total current assets... Equipment (36,625) (46,000) $513,391 $439,800 Total assets. Liabilities and Equity Short-term notes payable Total current liabilities Long-term notes payable Total liabilities Equity Common stock, $5 par value Paid-in capital in excess of 0,000 6,000 63,141 120.675 65,000 48.75 128,141 169.425 162,750 50,250 par, common stock Retained eanings. Total liabilities and equity 120,125 $513,391 $439,800 37,500 185,000