1 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. FORTEN COMPANY Comparative Balance Sheets December 31, 2017 and 2016 2017 2016 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 $ 57,400 73,320 283,156 $ 78,500 55,625 256,800 1,260 1,995 415,136 392,920 152,500 113,000 (39,125) (48,500) $528,511 $457,420 $ 58,141 $122,175 11,500 7,000 69,641 129,175 62,500 53,750 Total liabilities 132,141 182,925 Equity Common stock, $5 par value 172,750 155,250 Paid-in capital in excess of par, common stock 42,500 0 Retained earnings 181,120 119,245 Total liabilities and equity $528,511 $457,420 Sales FORTEN COMPANY Income Statement For Year Ended December 31, 2017 Cost of goods sold $607,500 290 000 FORTEN COMPANY Income Statement For Year Ended December 31, 2017 Sales $607,500 Cost of goods sold 290,000 Operating expenses Gross profit Depreciation expense 317,500 $ 25,750 Other expenses 137,400 163,150 Other gains (losses) Loss on sale of equipment (10,125) Income before taxes 144,225 Income taxes expense Net income 31,250 $112,975