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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

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 $ 657,500
Cost of goods sold 300,000
Gross profit 357,500
Operating expenses (excluding depreciation) $ 147,400
Depreciation expense 35,750 183,150
Other gains (losses)
Loss on sale of equipment (20,125)
Income before taxes 154,225
Income taxes expense 45,250
Net income $ 108,975

FORTEN COMPANY
Comparative Balance Sheets
December 31
Current Year Prior Year
Assets
Cash $ 72,400 $ 88,500
Accounts receivable 88,420 65,625
Inventory 298,156 266,800
Prepaid expenses 1,360 2,195
Total current assets 460,336 423,120
Equipment 142,500 123,000
Accumulated depreciationEquipment (44,125) (53,500)
Total assets $ 558,711 $ 492,620
Liabilities and Equity
Accounts payable $ 68,141 $ 137,175
Long-term notes payable 72,000 72,750
Total liabilities 140,141 209,925
Equity
Common stock, $5 par value 185,250 165,250
Paid-in capital in excess of par, common stock 60,000 0
Retained earnings 173,320 117,445
Total liabilities and equity $ 558,711 $ 492,620

Additional Information on Current Year Transactions

  1. The loss on the cash sale of equipment was $20,125 (details in b).
  2. Sold equipment costing $91,875, with accumulated depreciation of $45,125, for $26,625 cash.
  3. Purchased equipment costing $111,375 by paying $60,000 cash and signing a long-term notes payable for the balance.
  4. Paid $52,125 cash to reduce the long-term notes payable.
  5. Issued 4,000 shares of common stock for $20 cash per share.
  6. Declared and paid cash dividends of $53,100.

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