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 $ 637,500 296,000 341, 500 $ 143, 400 31,750 175, 150 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 (16, 125) 150, 225 39, 650 $ 110, 575 FORTEN COMPANY Comparative Balance Sheets December 31 Current Year Prior Year $ 66, 400 82, 380 292, 156 1,320 442, 256 146, 500 (42, 125) $ 546, 631 $ 84,500 61, 625 262, 800 2, 115 411,040 119,000 (51, 500) $ 478, 540 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 Equity Common stock, $5 par value Paid-in capital in excess of par, common stock Retained earnings Total liabilities and equity $ 64, 141 13, 300 77, 441 59,500 136, 941 $ 131, 175 8, 200 139, 375 59,750 199, 125 179, 250 54,000 176, 440 $ 546, 631 161, 250 0 118, 165 $ 478, 540 Additional Information on Current Year Transactions a. The loss on the cash sale of equipment was $16,125 (details in b). b. Sold equipment costing $79,875, with accumulated depreciation of $41,125, for $22,625 cash. c. Purchased equipment costing $107,375 by paying $52,000 cash and signing a long-term note payable for the balance. d. Borrowed $5,100 cash by signing a short-term note payable. e. Paid $55.625 cash to reduce the lona-term notes pavable. f. Issued 3,600 shares of common stock for $20 cash per share. g. Declared and paid cash dividends of $52,300. Required: 1. Prepare a complete statement of cash flows using the indirect method for the current year. (Amounts to be deducted s indicated with a minus sign.) FORTEN COMPANY Statement of Cash Flows For Current Year Ended December 31 Cash flows from operating activities Net income $ 110,575 Adjustments to reconcile net income to net cash provided by operations: Income statement items not affecting cash Depreciation expense 31,750 Changes in current assets and current liabilities Increase in inventory Decrease in prepaid expenses Decrease in accounts payable (29,356) 795 (67,034) $ 46,730 Net cash provided by operating activities Cash flows from investing activities 0 Cash flows from financing activities: Net increase (decrease) in cash $ 46,730