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.

FORTEN COMPANY
Statement of Cash Flows
For Current Year Ended December 31
Cash flows from operating activities
Net income	$108,975
Adjustments to reconcile net income to net cash provided by operations:
Income statement items not affecting cash
Depreciation expense	35,750
Loss on disposal of equipment	20,125
Changes in current assets and current liabilities
Increase in accounts receivable	(22,795)
Increase in inventory	(31,356)
Decrease in prepaid expenses	835
Decrease in accounts payable	(69,034)
Net cash provided by operating activities		$42,500
Cash flows from investing activities
Cash paid for equipment
Cash received from sale of equipment
Net cash used in investing activities		0
Cash flows from financing activities:
Cash paid on long-term notes
Cash paid for dividends
Cash received from issuing stock
Net cash used in financing activities		0
Net increase (decrease) in cash		$42,500
Cash balance at December 31, prior year
Cash balance at December 31, current year		$42,500