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. $ 612,500 291,000 321,500 FORTEN COMPANY Income Statement For Current Year Ended December 31 Sales Cost of goods sold Gross profit Operating expenses (excluding depreciation) $ 138,400 Depreciation expense 26,750 Other gains (losses) Loss on sale of equipment Income before taxes Income taxes expense Net income 165, 150 (11,125) 145,225 32,650 $ 112,575 FORTEN COMPANY Comparative Balance Sheets December 31 Current Year Prior Year $ 58,900 74,830 284,656 1,270 419,656 151,500 (39,625) $ 531,531 $ 79,500 56,625 257,800 2,015 395,940 114,000 (49,000) $ 460,940 Assets Cash Accounts receivable Inventory Prepaid expenses Total current assets Equipment Accumulated depreciation-Equipment Total assets Liabilities and Equity Accounts payable Long-term notes payable Total liabilities Equity Common stock, $5 par value Paid-in capital in excess of par, common stock Retained earnings Total liabilities and equity $ 59,141 73,800 132,941 $ 123,675 61,950 185,625 171,759 46,500 180, 340 $ 531,531 156, 250 0 119,065 $ 460,940 Additional Information on Current Year Transactions a. The loss on the cash sale of equipment was $11,125 (details in b). b. Sold equipment costing $64,875, with accumulated depreciation of $36,125, for $17,625 cash. c. Purchased equipment costing $102,375 by paying $42,000 cash and signing a long-term notes payable for the balance. d. Paid $48,525 cash to reduce the long-term notes payable. e. Issued 3,100 shares of common stock for $20 cash per share. f. Declared and paid cash dividends of $51,300. FORTEN COMPANY Statement of Cash Flows For Current Year Ended December 31 Cash flows from operating activities Net income Adjustments to reconcile net income to net cash provided by operations: Income statement items not affecting cash Depreciation expense $ 112,575 26,750 745 Changes in current assets and current liabilities Decrease in prepaid expenses Increase in inventory Decrease in accounts payable Increase in accounts receivable $ 140,070 Net cash provided by operating activities Cash flows from investing activities Cash paid for equipment Cash received from sale of equipment 0 Net cash used in investing activities Cash flows from financing activities. Cash received from issuing stock Cash paid for dividends Cash paid on long-term notes 0 $ 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 140,070 79,500 $ 219,570