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) $ 672,500 303,000 369,500 $ 150,400 38,750 189,150 Loss on sale of equipment Income before taxes (23,125) Income taxes expense Net income 157,225 49,450 $107,775 FORTEN COMPANY Comparative Balance Sheets December 31 Current Year Prior Year Assets Cash Accounts receivable Inventory Prepaid expenses Total current assets Equipment Accumulated depreciation-Equipment Total assets $ 76,900 92,950 302,656 $ 91,500 68,625 269,800 1,390 2,255 473,896 432,180 126,000 139,500 (45,625) $ 567,771 (55,000) $ 503,180 -- -, -- Assets FORTEN COMPANY Comparative Balance Sheets December 31 Current Year Prior Year Cash Accounts receivable Inventory Prepaid expenses Total current assets Equipment Accumulated depreciation-Equipment Total assets Liabilities and Equity Accounts payable 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 Additional Information on Current Year Transactions $ 76,900 92,950 302,656 $ 91,500 68,625 269,800 1,390 2,255 473,896 432,180 139,500 (45,625) $ 567,771 $ 71,141 126,000 (55,000) $ 503,180 76,350 $141,675 71,400 142,541 218,025 189,750 168,250 64,500 0. 170,980 116,905 $ 567,771 $ 503,180 a. The loss on the cash sale of equipment was $23,125 (details in b). b. Sold equipment costing $100,875, with accumulated depreciation of $48,125, for $29,625 cash. c. Purchased equipment costing $114,375 by paying $66,000 cash and signing a long-term notes payable for the balance. d. Paid $53,325 cash to reduce the long-term notes payable. e. Issued 4,300 shares of common stock for $20 cash per share. f. Declared and paid cash dividends of $53,700. Cash flows from operating activities FORTEN COMPANY Statement of Cash Flows For Current Year Ended December 31 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 investing activities Cash flows from financing activities: Net increase (decrease) in cash Cash balance at December 31, prior year Cash balance at December 31, current year