Forten Company, a merchandiser, recently completed its calendar-year 2018 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, balance sheets, and additional information follow FORTEN COMPANY Comparative Balance Sheets December 31, 2018 and 2017 2018 2017 Assets Cash Accounts receivable Inventory Prepaid expenses Total current assets Equipment Accum. depreciation-Equipment Total assets $58,900 74,830 284,656 79,500 56,625 257,800 2,015 395,940 114,000 1,270 419,656 151,500 (39,625) (49,000) $531,531 $460,940 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 $ 59,141 $123,675 7,200 130,875 62,000 54, 750 185,625 11.800 70,941 132,941 174,750 46,500 177,340 159,250 116,06!5 $531,531 $460,940 Total liabilities and equity FORTEN COMPANY Income Statement For Year Ended December 31, 2018 Sales Cost of goods sold Gross profit Operating expenses $612,500 291,000 321,500 Depreciation expense $ 26,750 other expenses Other gains (losses) 138,400 165,150 11,125 145,225 32,650 $112,575 Loss on sale of equipment Income before taxes Income taxes expense Net income Additional Information on Year 2018 Transactions a. The loss on the cash sale of equipment was $11,125 (details in b) b. Sold equipment costing $64,875, with accumulated depreciation of $36,125, for $17,625 cash. c. Purchased equipment costing $102,375 by paying $42,000 cash and signing a long-term note payable for the balance d. Borrowed $4,600 cash by signing a short-term note payable e. Paid $53,125 cash to reduce the long-term notes payable f. Issued 3,100 shares of common stock for $20 cash per share g. Declared and paid cash dividends of $51,300 FORTEN COMPANY Statement of Cash Flows For Year Ended December 31, 2018 Cash flows from operating activities Adjustments to reconcile net income to net cash provided by operations: Income statement items not affecting cash Changes in current assets and current liabilities Cash flows from investing activities Cash flows from financing activities: 0 Net increase (decrease) in cash Cash balance at December 31, 2017 Cash balance at December 31, 2018 0 0