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. Prior Year FORTEN COMPANY Comparative Balance Sheets December 31 Current Year Assets Cash $ 76,900 Accounts receivable 92,950 Inventory 302,656 Prepaid expenses 1,390 Total current assets 473,896 Equipment 139,500 Accum. depreciation-Equipment (45, 625) Total assets $567,771 Liabilities and Equity Accounts payable $ 71,141 Short-term notes payable 15,400 Total current liabilities 86,541 Long-term notes payable 56,000 Total liabilities 142,541 Equity Common stock, $5 par value 189,750 Paid-in capital in excess of par, 64,500 common stock Retained earnings 170,980 Total liabilities and equity $567,771 $ 91,500 68,625 269,800 2,255 432,180 126,000 (55,000) $503,180 $141,675 9,600 151,275 66,750 218,025 168,250 0 116,905 $503,180 FORTEN COMPANY Income Statement For Current Year Ended December 31 Sales $672,500 Cost of goods sold 303,000 Gross profit 369,500 Operating expenses Depreciation $ 38,750 expense Other expenses 150,400 189,150 Other gains (losses) Loss on sale of (23, 125) equipment Income before taxes 157, 225 Income taxes expense 49,450 Net income $ 107,775 Additional Information on Current Year Transactions a. The loss on the cash sale of equipment was $23,125 (details in b). b. Sold equipment costing $100,875, with accumulated depreciation of $48,125, for $29,625 cash. c. Purchased equipment costing $114,375 by paying $66,000 cash and signing a long-term note payable for the balance. d. Borrowed $5,800 cash by signing a short-term note payable. e. Paid $59,125 cash to reduce the long-term notes payable. f. Issued 4,300 shares of common stock for $20 cash per share. g. Declared and paid cash dividends of $53,700. Year Year $ $ Balance sheet-debit Cash Accounts receivable Inventory Prepaid expenses Equipment $ 14,600X 24,325 32,856 91,500 68,625 269,800 2,255 126,000 558,180 76,900 92,950 302,656 1,390 139,500 613,396 865 13,500X L $ $ $ $ 45,625 9,375X 70,534 5,800 Balance sheet credit Accumulated depreciation- Equipment Accounts payable Short-term notes payable Long-term notes payable Common stock, $5 par value Paid-in capital in excess of par value, common stock Retained earnings 55,000 141,675 9,600 66,750 168,250 0 71,141 15,400 56,000 198,750 10,750 30,500 55,500X 54,075 116,905 558,180 55,500 170,980 613,396 $ $ 107,775 X Statement of cash flows Operating activities Net income Depreciation expense Loss on sale of equipment Increase in accounts receivable Increase in inventory Decrease in prepaid expenses Decrease in accounts payable Borrowed on short-term note Investing activities Receipt from sale of equipment Payment to purchase equipment 38,750 23,125 (24,325 X (32,856 X 865 I ssssssssss (70,534 X (59,175 X 29,625 (66,000 X Financing activities Payment on long-term note Payment of cash dividends Issued common stock for cash (59,125 X (53,700X 30,500X 55,500X Non cash investing and financing activities