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 $ $582,500$

Cost of goods sold $285,000$

Gross profit $297,500$

Operating expenses $($excluding depreciation$)$ $ $132,400$

Depreciation expense $20,750153,150$

Other gains $($losses$)$

Loss on sale of equipment $(5,125)$

Income before taxes $139,225$

Income taxes expense $24,250$

Net income $ $114,975$

FORTEN COMPANY

Comparative Balance Sheets

December $31$

Current Year Prior Year

Assets

Cash $ $49,800$ $ $73,500$

Accounts receivable $65,81050,625$

Inventory $275,656251,800$

Prepaid expenses $1,2501,875$

Total current assets $392,516377,800$

Equipment $157,500108,000$

Accumulated depreciation$$Equipment $(36,625)(46,000)$

Total assets $ $513,391$ $ $439,800$

Liabilities and Equity

Accounts payable $ $53,141$ $ $114,675$

Long$-$term notes payable $75,00054,750$

Total liabilities $128,141169,425$

Equity

Common stock, $$5$ par value $162,750150,250$

Paid$-$in capital in excess of par, common stock $37,5000$

Retained earnings $185,000120,125$

Total liabilities and equity $ $513,391$ $ $439,800$

Additional Information on Current Year Transactions

The loss on the cash sale of equipment was $$5,125($details in b$).$

Sold equipment costing $$46,875,$ with accumulated depreciation of $$30,125,$ for $$11,625$ cash.

Purchased equipment costing $$96,375$ by paying $$30,000$ cash and signing a long$-$term notes payable for the balance.

Paid $$46,125$ cash to reduce the long$-$term notes payable.

Issued $2,500$ shares of common stock for $$20$ cash per share.

Declared and paid cash dividends of $$50,100.$

Required:

$1.$ Prepare a complete statement of cash flows using the indirect method for the current year.

Note: Amounts to be deducted should be indicated with a minus sign.

FORTEN COMPANY

Statement of Cash Flows

For Current Year Ended December $31$

Cash flows from operating activities

Net incomeselected answer correct $$107,775$selected answer incorrect

Adjustments to reconcile net income to net cash provided by operations:

Income statement items not affecting cash

Depreciation expenseselected answer correct $38,750$selected answer incorrect

Loss on disposal of equipmentselected answer correct $23,125$selected answer incorrect

Changes in current assets and current liabilities

Increase in accounts receivableselected answer correct $(24,325)$selected answer incorrect

Increase in inventoryselected answer correct $(32,856)$selected answer incorrect

Decrease in prepaid expensesselected answer correct $865$selected answer incorrect

Decrease in accounts payableselected answer correct $(70,534)$selected answer incorrect

not attempted not attempted

Net cash provided by operating activitiesselected answer correct $$42,800$

Cash flows from investing activities

Cash paid for equipmentselected answer correct $(66,000)$selected answer incorrect

Cash received from sale of equipmentselected answer correct $29,625$selected answer incorrect

not attempted not attempted

Net cash used in investing activitiesselected answer correct $(36,375)$

Cash flows from financing activities:

Cash borrowed on short$-$term noteselected answer incorrect $0$selected answer correct

Cash paid on long$-$term notesselected answer correct $(53,325)$selected answer incorrect

Cash received from issuing stockselected answer correct $86,000$selected answer incorrect

Cash paid for dividendsselected answer correct $(53,700)$selected answer incorrect

Net cash used in financing activitiesselected answer correct $(21,025)$

Net increase $($decrease$)$ in cash $$(14,600)$

Cash balance at December $31,$ prior year $91,500$selected answer incorrect

Cash balance at December $31,$ current year $$76,900$