00 Required information [The following information applies to the questions displayed below.] Forten Company, a merchandiser, recently completed its calendar-year 2017 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. 15 points FORTEN COMPANY Comparative Balance Sheets December 31, 2017 and 2016 2017 2016 $ 57,400 73,320 283, 156 1,260 415, 136 152,500 (39,125) $528,511 $ 78,500 55,625 256,800 1,995 392,920 113,000 (48,500) $457, 420 Assets Cash Accounts receivable Inventory Prepaid expenses Total current assets Equipment Accum. depreciation Equipment Total assets Liabilities and Equity Accounts payable 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 par, common stock Retained earnings Total liabilities and equity $ 58,141 11,500 69,641 62,500 132,141 $122,175 7,000 129,175 53,750 182,925 172,750 42,500 181, 120 $528,511 155, 250 0 119,245 $ 457, 420 8 $607,500 290,000 317,500 15 points FORTEN COMPANY Income Statement For Year Ended December 31, 2017 Sales Cost of goods sold Gross profit Operating expenses Depreciation expense $ 25,750 Other expenses 137,400 Other gains (losses) Loss on sale of equipment Income before taxes Income taxes expense Net income 163, 150 (10,125) 144, 225 31,250 $112,975 Additional Information on Year 2017 Transactions a. The loss on the cash sale of equipment was $10,125 (details in b). b. Sold equipment costing $61,875, with accumulated depreciation of $35,125, for $16,625 cash. c. Purchased equipment costing $101,375 by paying $40,000 cash and signing a long-term note payable for the balance. d. Borrowed $4,500 cash by signing a short-term note payable. e. Paid $52,625 cash to reduce the long-term notes payable. f. Issued 3,000 shares of common stock for $20 cash per share. g. Declared and paid cash dividends of $51,100. 8 Required information should be indicated with a minus sign.) 15 points FORTEN COMPANY Statement of Cash Flows For Year Ended December 31, 2017 Cash flows from operating activities Adjustments to reconcile net income to net cash provided by operations: $ 0 Cash flows from investing activities 0 Cash flows from financing activities: 0 S 0 Net increase (decrease) in cash Cash balance at beginning of year Cash balance at end of year $ 0