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		$ 667,500
Cost of goods sold		302,000
Gross profit		365,500
Operating expenses (excluding depreciation)	$ 149,400
Depreciation expense	37,750	187,150
Other gains (losses)
Loss on sale of equipment		(22,125)
Income before taxes		156,225
Income taxes expense		48,050
Net income		$ 108,175

FORTEN COMPANY
Comparative Balance Sheets
December 31
	Current Year	Prior Year
Assets
Cash	$ 75,400	$ 90,500
Accounts receivable	91,440	67,625
Inventory	301,156	268,800
Prepaid expenses	1,380	2,235
Total current assets	469,376	429,160
Equipment	140,500	125,000
Accumulated depreciationEquipment	(45,125)	(54,500)
Total assets	$ 564,751	$ 499,660
Liabilities and Equity
Accounts payable	$ 70,141	$ 140,175
Long-term notes payable	71,600	75,150
Total liabilities	141,741	215,325
Equity
Common stock, $5 par value	188,250	167,250
Paid-in capital in excess of par, common stock	63,000	0
Retained earnings	171,760	117,085
Total liabilities and equity	$ 564,751	$ 499,660

Additional Information on Current Year Transactions

The loss on the cash sale of equipment was $22,125 (details in b).

Sold equipment costing $97,875, with accumulated depreciation of $47,125, for $28,625 cash.

Purchased equipment costing $113,375 by paying $64,000 cash and signing a long-term notes payable for the balance.

Paid $52,925 cash to reduce the long-term notes payable.

Issued 4,200 shares of common stock for $20 cash per share.

Declared and paid cash dividends of $53,500.

FORTEN COMPANY
Spreadsheet for Statement of Cash Flows
For Current Year Ended December 31
	December 31, Prior Year	Analysis of Changes		December 31, Current Year
		Debit	Credit
Balance sheetdebit
Cash	$90,500			$75,400
Accounts receivable	67,625
Inventory	268,800
Prepaid expenses	2,235
Equipment	125,000
	$554,160			$75,400
Balance sheetcredit
Accumulated depreciationEquipment	$54,500
Accounts payable	140,175
Long-term notes payable	75,150
Common stock, $5 par value	167,250
Paid-in capital in excess of par value, common stock	0
Retained earnings	117,085
	$554,160			$0
Statement of cash flows
Operating activities
Investing activities
Financing activities
Non cash investing and financing activities
Purchase of equipment financed by long-term notes payable
		$0	$0