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.