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, (4) all debits to Accounts Payable reflect cash payments for inventory, and (5) Other Expenses are paid in advance and are initially debited to Prepaid Expenses. FORTEN COMPANY Comparative Balance Sheets December 31 Current Year Prior Year Assets Cash $ 52,900 $75,500 Accounts receivable 68,810 52,625 Inventory 278,656 253,000 Prepaid expenses 1,270 1,995 Total current assets 401,6JG 383,920 Equipment 155,500 110,000 Accum. depreciation Equipment (37.625) 42.000 Total assets 5 519,511 $ 446,920 Liabilities and Equity Accounts payable $ 55,141 5 117.675 Short-ternt notes payable 10.600 5.400 Total current liabilities 65,741 124,075 64.000 50,250 Long term notes payable Total liabilities 129,741 174,825 Equity 165,750 152,250 Common stock, 55 par value Paid-in capital in excess of par, common stock 40; 500 182.520 119,545 Retained earnings $ 519,511 $ 446,920 Total liabilities and equity $ 592,500 287,000 305,500 FORTEN COMPANY Income Statement For Current Year Ended December 31 Sales Cost of goods sold Gross profit Operating expenses Depreciation expense $ 22,750 Other expenses 134,400 Other gains (losses) Loss on sale of equipment Income before taxes Income taxes expense Net income 157, 15e (7,125) 141,225 27,050 $ 114,175 Additional Information on Current Year Transactions a. The loss on the cash sale of equipment was $7:125 (details in b). b. Sold equipment costing $52,875, with accumulated depreciation of $32,125, for $13,625 cash c. Purchased equipment costing $98,375 by paying $34.000 cash and signing a long-term note payable for the balance d. Borrowed $4,200 cash by signing a short-term note payable. e. Paid $51,125 cash to reduce the long-term notes payable. f. Issued 2,700 shares of common stock for $20 cash per share g. Declared and paid cash dividends of $50,500. Required: Aromnete statement of cash flows using the indirect method for the current year. (Amounts to be deducted should be 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.) FORTEN COMPANY Statement of Cash Flows For Current Year Ended December 31 Cash flows from operating activities Net Income $ 114 175 Adjustments to reconcile net income to not cash provided by operations: Depreciation expense 22.750 Accounts receivable Increase (16.185) Inventory Increase (24 056) Prepaid exponse decrease 725 (62.534) Accounts payable decrease Loss on disposal of equipment (7125) 5 26 950 Net cash provided by operating activities Cash flows from investing activities Cash paid for equipment Cash received from sale of equipment $ GA 26,950 Net cash provided by operating activities Cash flows from investing activities Cash paid for equipment Cash received from sale of equipment 4,200 Net cash used in investing activities Cash flows from financing activities: Cash borrowed on short-term note Cash paid on long-term note Cash received from issuing stock Cash paid for dividends 4.200 31,150 $ 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 $ 31,150