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				$	647,500
Cost of goods sold					298,000
Gross profit					349,500
Operating expenses (excluding depreciation)	$	145,400
Depreciation expense		33,750			179,150
Other gains (losses)
Loss on sale of equipment					(18,125	)
Income before taxes					152,225
Income taxes expense					42,450
Net income				$	109,775

FORTEN COMPANY Comparative Balance Sheets December 31
	Current Year						Prior Year
Assets
Cash		$	69,400					$	86,500
Accounts receivable			85,400						63,625
Inventory			295,156						264,800
Prepaid expenses			1,340						2,155
Total current assets			451,296						417,080
Equipment			144,500						121,000
Accum. depreciationEquipment			(43,125	)					(52,500	)
Total assets		$	552,671					$	485,580
Liabilities and Equity
Accounts payable		$	66,141					$	134,175
Short-term notes payable			13,900						8,600
Total current liabilities			80,041						142,775
Long-term notes payable			58,500						61,750
Total liabilities			138,541						204,525
Equity
Common stock, $5 par value			182,250						163,250
Paid-in capital in excess of par, common stock			57,000						0
Retained earnings			174,880						117,805
Total liabilities and equity		$	552,671					$	485,580

Additional Information on Current Year Transactions

1. The loss on the cash sale of equipment was $18,125 (details in b).
2. Sold equipment costing $85,875, with accumulated depreciation of $43,125, for $24,625 cash.
3. Purchased equipment costing $109,375 by paying $56,000 cash and signing a long-term note payable for the balance.
4. Borrowed $5,300 cash by signing a short-term note payable.
5. Paid $56,625 cash to reduce the long-term notes payable.
6. Issued 3,800 shares of common stock for $20 cash per share.
7. Declared and paid cash dividends of $52,700.

a) Prepare a complete statement of cash flows using the indirect method for the current year. (Amounts to be deducted should be indicated with a minus sign.)

b) Prepare a complete statement of cash flows using the direct method. (Amounts to be deducted should be indicated with a minus sign.)

Required: 1. Prepare a complete statement of cash flows using the indirect method for the current year. (Amounts to be deducted should be Indicated with a minus sign.) Answer is not complete. FORTEN COMPANY Statement of Cash Flows For Current Year Ended December 31 Cash flows from operating activities Net income S 109.775 Adjustments to reconcile net income to net cash provided by operations: Income statement items not affecting cash Depreciation expense 33.750 Loss on disposal of equipment 18.125 Changes in current assets and current liabilities Increase in accounts receivable (21.775) Increase in inventory (30.358) Decrease in prepaid expenses 815 Decrease in accounts payable (68,034) Increase in prepaid expenses 5.300 X Net cash provided by operating activities S Cash flows from investing activities Cash received from sale of equipment 24,625 Cash paid for equipment (50.000) SIS OOOOO Xolololo 47,600 > (31,375) Net cash used in investing activities Cash flows from financing activities: Cash paid on long-term note Cash received from issuing stock Cash paid for dividends (56,625) 76.000 (52.700) ON Net cash used in financing activities Net increase (decrease) in cash Cash balance at December 31. prior year Cash balance at December 31, current year (33.325) S (17.100) 86.500 S 69,400 Required: Prepare a complete statement of cash flows using the direct method. (Amounts to be deducted should be Indicated with a minus sign.) Answer is not complete. FORTEN COMPANY Statement of Cash Flows For Current Year Ended December 31 Cash flows from operating activities Cash received from customers IS 625.725 Cash paid for inventory (557.450) Cash paid for income taxes (42.450) 0 S 25,825 Cash flows from investing activities Cash received from sale of equipment Cash paid for equipment SI 24.625 (109.375) (84.750) Cash flows from financing activities Cash paid for dividends Cash paid on long-term note Cash received from issuing stock OOO (52.700) (3.250) X 78.000 X Net cash provided by financing activities Net increase (decrease) in cash Cash balance at December 31. prior year Cash balance at December 31, current year 20.050 S (38.875) 86,500 S 47.625