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 $ 58,900 74,830 284,656 1,270 419,656 151,500 (39,625) $531,531 $ 79,500 56,625 257,800 2,015 395,940 114,000 (49,000) $460,940 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 Total liabilities Equity Common stock, $5 par value Paid-in capital in excess of par, common stock Retained earnings Total liabilities and equity $ 59, 141 11,800 70,941 62,000 132,941 $123,675 7,200 130,875 54,750 185,625 174,750 43,500 180, 340 $531,531 156,250 0 119,065 $460,940 $612,500 291,000 321,500 FORTEN COMPANY Income Statement For Year Ended December 31, 2017 Sales Cost of goods sold Gross profit Operating expenses Depreciation expense $ 26,750 Other expenses 138,400 Other gains (losses) Loss on sale of equipment Income before taxes Income taxes expense Net income 165, 150 (11, 125) 145, 225 32,650 $112,575 ditional Information on Year 2017 Transactions The loss on the cash sale of equipment was $11,125 (details in b). Sold equipment costing $64,875, with accumulated depreciation of $36,125, for $17,625 cash. Purchased equipment costing $102,375 by paying $42,000 cash and signing a long-term note payable for the balance. Borrowed $4,600 cash by signing a short-term note payable. Paid $53,125 cash to reduce the long-term notes payable. Issued 3,100 shares of common stock for $20 cash per share. Declared and paid cash dividends of $51,300. FORTEN COMPANY Statement of Cash Flows For Year Ended December 31, 2017 Cash flows from operating activities Adjustments to reconcile net income to net cash provided by operations: $ 0 Cash flows from investing activities 0 Cash flows from financing activities