1 1 Required information [The following information applies to the questions displayed below] Forten Company's current year income statement, comparative balance sheets, and additional information follow. For the 25 year, (1) all sales are credit sales, (2) all credits to Accounts Receivable reflect cash receipts from customers, (3) all Po'ms purchases of inventory are on credit, and (4) all debits to Accounts Payable reflect cash payments for inventory. FORTEN COMPANY Income statement For Current Year Ended December 31 sales 5 602,500 Cost of goods sold 289,000 Gross profit 313,500 Operating expenses (excluding depreciation) $ 136,400 Depreciation expense 24,750 161,150 other gains (losses) Loss on sale of equipment (9,125) Income before taxes 143,225 Income taxes expense 29,850 Net income $ 113,375 FORTEN COMPANY Comparative Balance Sheets December 31 Current Year Prior Year Assets Cash $ 55,900 $ 77,500 Accounts receivable 71,810 54,625 Inventory 281,656 255,800 Prepaid expenses 1,250 1,975 Total current assets 410,616 389,900 Equipment 153,500 112,000 Accumulated depreciationEquipment (38,625) (48,000) Total assets $ 525,491 $ 453,900 Liabilities and Equity Accounts payable $ 57,141 $ 120,675 Long-term notes payable 74,200 59,550 Total liabilities 131,341 180,225 Equity Common stock, $5 par value 168,750 154,250 Paid-in capital in excess of par, common stock 43,500 0 Retained earnings 181,900 119,425 Total liabilities and equity $ 525:491 $ 4531900 Additional Information on Current Year Transactions 3. The loss on the cash sale of equipment was $9,125 (details in b). b. Sold equipment costing $58,875, with accumulated depreciation of $34,125, for $15,625 cash. c. Purchased equipment costing $100,375 by paying $38,000 cash and signing a long-term notes payable for the balance. d. Paid $47,725 cash to reduce the long-term notes payable. e. Issued 2,900 shares of common stock for $20 cash per share. f. Declared and paid cash dividends of $50,900. Required: 1. Prepare a complete statement of cash flows using the indirect method for the current year. (Amounts to be deducted should be indicated with a minus sign.) Cash flows from operating activities Adjustments to reconcile net income to net cash provided by operations: Income statement items not affecting cash Cash flows from investing activities 0 Cash flows from financing activities: 0 Net increase (decrease) in cash 0 Cash balance at December 31, prior year Cash balance at December 31, current year 0