Forten Company's current year income statement, comparative balance sheets, and additional information follow. 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, and (4) all debits to Accounts Payable reflect cash payments for inventory.

FORTEN COMPANY
Income Statement
For Current Year Ended December 31
Sales		$ 677,500
Cost of goods sold		304,000
Gross profit		373,500
Operating expenses (excluding depreciation)	$ 151,400
Depreciation expense	39,750	191,150
Other gains (losses)
Loss on sale of equipment		(24,125)
Income before taxes		158,225
Income taxes expense		50,850
Net income		$ 107,375

FORTEN COMPANY
Comparative Balance Sheets
December 31
	Current Year	Prior Year
Assets
Cash	$ 78,400	$ 92,500
Accounts receivable	94,460	69,625
Inventory	304,156	270,800
Prepaid expenses	1,400	2,275
Total current assets	478,416	435,200
Equipment	138,500	127,000
Accumulated depreciationEquipment	(46,125)	(55,500)
Total assets	$ 570,791	$ 506,700
Liabilities and Equity
Accounts payable	$ 72,141	$ 143,175
Long-term notes payable	71,200	77,550
Total liabilities	143,341	220,725
Equity
Common stock, $5 par value	191,250	169,250
Paid-in capital in excess of par, common stock	66,000	0
Retained earnings	170,200	116,725
Total liabilities and equity	$ 570,791	$ 506,700

Additional Information on Current Year Transactions

1. The loss on the cash sale of equipment was $24,125 (details in b).
2. Sold equipment costing $103,875, with accumulated depreciation of $49,125, for $30,625 cash.
3. Purchased equipment costing $115,375 by paying $68,000 cash and signing a long-term notes payable for the balance.
4. Paid $53,725 cash to reduce the long-term notes payable.
5. Issued 4,400 shares of common stock for $20 cash per share.
6. Declared and paid cash dividends of $53,900.

prepare statement of cash flows using direct method