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 pald in advance and are initially debited to Prepaid Expenses. 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 expensen 1,360 2,195 Total current assets 460,336 423,120 Equipment 142,500 123,000 Accum. depreciation-Equipment (44,125) (53,500) Total assets $558,711 $492,620 Liabilities and Equity Accounts payable $ 68,141 $137,175 Short-term notes payable 14,500 9,000 Total current liabilities 1 82,641 146,175 Long-term notes payable 57,500 63,750 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 $657,500 300,000 357,500 PORTEN COMPANY Income Statement Por Current Year Ended December 31 Sales Cost of goods sold Grosa profit Operating expensen Depreciation expense $ 35,750 Other expenses 147,400 Other gains (losses) Loss on sale of equipment Income before taxes Income taxes expense Net income 183, 150 (20,125) 154, 225 45,250 $108,975 Additional Information on Current Year Transactions a. The loss on the cash sale of equipment was $20,125 (details in b). b. Sold equipment costing $91,875, with accumulated depreciation of $45,125, for $26,625 cash. c. Purchased equipment costing $111,375 by paying $60,000 cash and signing a long-term note payable for the balance d. Borrowed $5,500 cash by signing a short-term note payable. e. Paid $57,625 cash to reduce the long-term notes playable. f. Issued 4,000 shares of common stock for $20 cosh per share. g. Declared and paid cash dividends of $53,100. 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 Flow 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: Depreciation expense 35,750 Loss on disposal of equipment 20,125 Accounts payable decreaso 0 Inventory increase 0 164,850 Net cash provided by operating activities Cash flows from investing activities Cash received from sale of equipment Cash paid for equipment 26,625 (60,000) (33,375) Net cash used in investing activities Cash flows from financing activities: Cash paid on long-term note $ 164,850 Net cash provided by operating activities Cash flows from investing activities Cash received from sale of equipment Cash paid for equipment 26,625 (00,000) (33,375) Net cash used in investing activities Cash flows from financing activities: Cash paid on long term noto Cash received from issuing stock Cash paid for dividends 0 (53, 100) (53, 100) 78,375 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 78,375