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 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 I. receipts from customers, (3) all purchases of inventory FORTEN COMPANY Income Statement For Year Ended December 31, 2017 Sales $582,500 Cost of goods sold Gross proft Operating expenses 285,000 297,500 $ 20,750 Depreciation expense Other expenses 132,400 153,150 Other gains (losses) Loss on sale of equipment 15,125) 139,225 24,250 $114,975 Income before taxes Income taxes expense Net income FORTEN COMPANY Comparative Balance Sheets December 31, 2017 and 2016 2017 2016 Assets 49,800S 73,500 65,81050,625 275,656251,800 1.2501875 Cash Accounts receivable Inventory Prepaid expenses 392,516 377,800 157,500 108,000 (36,625)46,000) S513,391$439,800 Total current assets Equipment Accum. depreciation-Equipment Total assets Liabilities and Equity Accounts payable Short-term notes payable Total current liabilities $53,141$114,675 10,0006,000 63,141 120,675 65,00048,750 128,141 169,425 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 162,750150,250 37,500 185000120,125 $513,391 $439,800 Additional Information on Year 2017 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 note payable for the balance. d. Borrowed $4,000 cash by signing a short-term note payable. e. Paid $50,125 cash to reduce the long-term notes payable. f. Issued 2,500 shares of common stock for $20 cash per share. g. Declared and paid cash dividends of $50,100. Required 1. Prepare a complete statement of cash fiows; report its operating activities using the indirect method. Disclose any noncash investing and financing activities in a note. Il. Refer to the information reported about Forten Company in Problem above Required Prepare a complete statement of cash flows using a spreadsheet as in Exhibit 16A.1; report its operating activities using the indirect method. Identify the debits and credits in the Analysis of Changes columns with letters that correspond to the following list of transactions and events. a. Net income was $114,975 b. Accounts receivable increased C. Inventory increased. d. Prepaid expenses decreased. e. Accounts payable decreased f. Depreciation expense was $20,750 8. Sold equipment costing $46,875, with accumulated depreciation of $30,125, for $11,625 cash. This yielded a loss of $5,125. h. Purchased equipment costing $96,375 by paying $30,000 cash and (i.) by signing a long-term note payable for the balance. i. Borrowed $4,000 cash by signing a short-term note payable. j. Paid $50,125 cash to reduce the long-term notes payable. k. Issued 2,500 shares of common stock for $20 cash per share. I. Declared and paid cash dividends of $50,100. Exhibit 16A.1 Spreadsheet for Preparing Statement of Cash Flows Indirect Method Spreadsheet for Statement of Cash Flows-Indirect Method For Year Ended December 31, 2017 Dec Dec. 31, Analysls of Changes Debit Credit 2017 2016 Balance Sheet-Debit Bal. Accounts 6 Cash Accounts receivable Inventory 10 Prepaid expenses 11 Plant assets 12 13 Balance Sheet-Credit Bal. Accounts 14Accumulated depreciation 15 Accounts payable