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 companys income statement and balance sheets follow.

FORTEN COMPANY Comparative Balance Sheets December 31, 2017 and 2016
	2017				2016
Assets
Cash	$	52,900			$	75,500
Accounts receivable		68,810				52,625
Inventory		278,656				253,800
Prepaid expenses		1,270				1,995
Total current assets		401,636				383,920
Equipment		155,500				110,000
Accum. depreciationEquipment		(37,625	)			(47,000	)
Total assets	$	519,511			$	446,920
Liabilities and Equity
Accounts payable	$	55,141			$	117,675
Short-term notes payable		10,600				6,400
Total current liabilities		65,741				124,075
Long-term notes payable		64,000				50,750
Total liabilities		129,741				174,825
Equity
Common stock, $5 par value		166,750				152,250
Paid-in capital in excess of par, common stock		39,500				0
Retained earnings		183,520				119,845
Total liabilities and equity	$	519,511			$	446,920

FORTEN COMPANY Income Statement For Year Ended December 31, 2017
Sales				$	592,500
Cost of goods sold					287,000
Gross profit					305,500
Operating expenses
Depreciation expense	$	22,750
Other expenses		134,400			157,150
Other gains (losses)
Loss on sale of equipment					(7,125	)
Income before taxes					141,225
Income taxes expense					27,050
Net income				$	114,175

Additional Information on Year 2017 Transactions

The loss on the cash sale of equipment was $7,125 (details in b).

Sold equipment costing $52,875, with accumulated depreciation of $32,125, for $13,625 cash.

Purchased equipment costing $98,375 by paying $34,000 cash and signing a long-term note payable for the balance.

Borrowed $4,200 cash by signing a short-term note payable.

Paid $51,125 cash to reduce the long-term notes payable.

Issued 2,700 shares of common stock for $20 cash per share.

Declared and paid cash dividends of $50,500.

FORTEN COMPANY
Statement of Cash Flows
For Year Ended December 31, 2017
Cash flows from operating activities
Net income	$114,175
Adjustments to reconcile net income to net cash provided by operations:
Accounts receivable increase	16,185
Inventory increase	22,856
Prepaid expense decrease	725
Accounts payable decrease	62,534
Depreciation expense	9,375
Loss on disposal of equipment
		$225,850
Cash flows from investing activities
Cash received from sale of equipment
Cash paid for equipment
		0
Cash flows from financing activities:
Cash borrowed on short-term note	4,200
Cash paid on long-term note	14,750
Cash received from issuing stock
Cash paid for dividends
		18,950
Net increase (decrease) in cash		$244,800
Cash balance at beginning of year
Cash balance at end of year		$244,800