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	$69,400	$86,500
Accounts receivable	85,400	63,625
Inventory	295,156	264,800
Prepaid expenses	1,340	2,155
Total current assets	451,296	417,080
Equipment	144,500	121,000
Accum. depreciationEquipment	(43,125)	(52,500)
Total assets	$552,671	$485,580
Liabilities and Equity
Accounts payable	$66,141	$134,175
Short-term notes payable	13,900	8,600
Total current liabilities	80,041	142,775
Long-term notes payable	58,500	61,750
Total liabilities	138,541	204,525
Equity
Common stock, $5 par value	188,750	163,250
Paid-in capital in excess of par, common stock	50,500	0
Retained earnings	174,880	117,805
Total liabilities and equity	$552,671	$485,580

FORTEN COMPANY Income Statement For Year Ended December 31, 2017

Sales		$647,500
Cost of goods sold		298,000
Gross profit		349,500
Operating expenses
Depreciation expense	$33,750
Other expenses	145,400	179,150
Other gains (losses)
Loss on sale of equipment		(18,125)
Income before taxes		152,225
Income taxes expense		42,450
Net income		$109,775

Additional Information on Year 2017 Transactions

The loss on the cash sale of equipment was $18,125 (details in b).

Sold equipment costing $85,875, with accumulated depreciation of $43,125, for $24,625 cash.

Purchased equipment costing $109,375 by paying $56,000 cash and signing a long-term note payable for the balance.

Borrowed $5,300 cash by signing a short-term note payable.

Paid $56,625 cash to reduce the long-term notes payable.

Issued 3,800 shares of common stock for $20 cash per share.

Declared and paid cash dividends of $52,700.

Prepare a complete statement of cash flows; report its operating activities according to the direct method