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 Cost of goods sold Gross profit Operating expenses (excluding depreciation) Depreciation expense Other gains (losses) Loss on sale of equipment Income before taxes Income taxes expense Net income $582,500 285,000 297,500 $132,400 20,750 153,150 (5,125) 139,225 24,250 $114,975 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 FORTEN COMPANY Comparative Balance Sheets December 31 Current Year $ 49,800 65,810 Prior Year $ 73,500 50,625 251,800 275,656 1,250 1,875 392,516 377,800 157,500 108,000 (36,625) (46,000) $513,391 $439,800 $ 53,141 $114,675 10,000 6,000 63,141 120,675 65,000 48,750 128,141 169,425 Equity Common stock, $5 par value 162,750 150,250 Paid-in capital in excess of par, common stock 37,500 0 Retained earnings 185,000 120,125 Total liabilities and equity $513,391 $439,800 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. Balance sheet-debit Cash Accounts receivable Inventory Spreadsheet for Statement of Cash Flows For Current Year Ended December 31 Analysis of Changes December 31, Prior Year December 31, Debit Credit Current Year $ $ 49,800 73,500 50,625 251,800 Prepaid expenses 1,875 Equipment 108,000 $ 485,800 $ 49,800 Balance sheet-credit Accumulated depreciation-Equipment $ 46,000 Accounts payable 114,675 Short-term notes payable 6,000 Long-term notes payable 48,750 Common stock, $5 par value 150,250 Paid-in capital in excess of par value, common stock 0 Retained earnings 120,125 $ 485,800 $ 0 Statement of cash flows. Operating activities Investing activities Financing activities Non cash investing and financing activities Purchase of equipment financed by long-term note payable $ 0 $ 0