Forten Company, a merchandiser, recently completed its calendar-year 2015 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 companys income statement and balance sheets follow.

FORTEN COMPANY

Comparative Balance Sheets

December 31, 2015 and 20142015

2014

AssetsCash$30,144$62,000Accounts receivable65,12551,125Inventory274,906250,800Prepaid expenses1,2001,600Total current assets371,375365,525Equipment142,000100,000Accum. depreciationEquipment(32,800)(40,000)Total assets$480,575$425,525Liabilities and EquityAccounts payable$60,075$108,200Short-term notes payable6,0004,000Total current liabilities66,075112,200Long-term notes payable38,17533,000Total liabilities104,250145,200EquityCommon stock, $5 par value152,500145,000Paid-in capital in excess of par, common stock22,5000Retained earnings201,325135,325Total liabilities and equity$480,575$425,525

FORTEN COMPANY

Income Statement

For Year Ended December 31, 2015Sales$585,000Cost of goods sold286,000Gross profit299,000Operating expensesDepreciation expense$18,000Other expenses140,000158,000Other gains (losses)Loss on sale of equipment(4,000)Income before taxes137,000Income taxes expense26,000Net income$111,000

Additional Information on Year 2015 Transactionsa.The loss on the cash sale of equipment was $4,000 (details inb).

b.Sold equipment costing $43,300, with accumulated depreciation of $25,200, for $14,100 cash.

c.Purchased equipment costing $85,300 by paying $40,000 cash and signing a long-term note payable for the balance.

d.Borrowed $2,000 cash by signing a short-term note payable.

e.Paid $40,125 cash to reduce the long-term notes payable.

f.Issued 1,500 shares of common stock for $20 cash per share.

g.Declared and paid cash dividends of $45,000.

Required:1.Prepare a complete statement of cash flows; report its operating activities using the indirect method.(Amounts to be deducted should be indicated with a minus sign.)