Cash flows from operating activities FORTEN COMPANY Statement of Cash Flows For Current Year Ended December 31 Adjustments to reconcile net income to net cash provided by operations: Income statement items not affecting cash Changes in current assets and current liabilities Cash flows from investing activities Cash flows from financing activities: Net increase (decrease) in cash Cash balance at December 31, prior year Cash balance at December 31, current year $ 0 FORTEN COMPANY Income Statement For Current Year Ended December 31 Sales Cost of goods sold Gross profit $ 582,500 285,000 297,500 Operating expenses (excluding depreciation) Depreciation expense $ 132,400 20,750 153,150 Other gains (losses). Loss on sale of equipment (5,125) Income before taxes 139,225 Income taxes expense 24,250 Net income Assets Cash Accounts receivable FORTEN COMPANY Comparative Balance Sheets December 31 Inventory Prepaid expenses Total current assets Equipment Accumulated depreciation-Equipment Total assets Liabilities and Equity Accounts payable Long-term notes payable Total liabilities Equity 0 0 $ 0 $ To 0 $ 114,975 Current Year Prior Year $ 49,800 65,810 $ 73,500 50,625 275,656 1,250 251,800 1,875 392,516 157,500 (36,625) 377,800 $ 513,391 108,000 (46,000) $ 439,800 $ 53,141 $ 114,675 75,000 54,750 128,141 169,425 162,750 37,500 185,000 150,250 0 120,125 $ 513,391 $ 439,800 Common stock, $5 par value Paid-in capital in excess of par, common stock Retained earnings Total liabilities and equity Additional Information on Current Year 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 notes payable for the balance. d. Paid $46,125 cash to reduce the long-term notes payable. e. Issued 2,500 shares of common stock for $20 cash per share. f. Declared and paid cash dividends of $50,100.