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Forten Company, a merchandiser, recently completed its calendar year 2018 operations. 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. The company's income statement, balance sheets, and additional information follow FORTEN COMPANY Comparative Balance Sheets December 31, 2018 and 2017 2018 2017 60,400 76,340 286,156 1,280 424,176 150,580 (48,125) $ 534,551 $ 80,580 57,625 258,888 2,035 398,960 115,000 (49,500) $ 464,460 Assets Cash Accounts receivable Inventory Prepaid expenses Total current assets Equipment Accum. depreciation-Equipment Total assets Liabilities and Equity Accounts payable Short-term notes payable Total current liabilities Long-term notes payable Total liabilities Equity Common stock, 55 par value Paid-in capital in excess of par, common stock Retained earnings $ 60,141 12,100 72,241 61,500 133,741 $ 125, 175 7,400 132,575 55,750 188,325 160, 750 176,750 48,000 176,060 115365 160,750 Equity Common stock, $5 par value Paid-in capital in excess of par, common stock Retained earnings Total liabilities and equity 176,750 48,000 176,060 $ 534,551 115,385 $ 464,460 $ 617,500 292,000 325,500 FORTEN COMPANY Income Statement For Year Ended December 31, 2018 Sales Cost of goods sold Gross profit Operating expenses Depreciation expense $ 27,750 Other expenses 139,400 Other gains (losses) Loss on sale of equipment Income before taxes Income taxes expense Net income 167,150 (12,125) 146,225 34,050 $ 112,175 a. The loss on the cash sale of equipment was $12,125 (details in b). b. Sold equipment costing $67,875, with accumulated depreciation of $37125, for $18,625 cash. c. Purchased equipment costing $103,375 by paying $44,000 cash and signing a long-term note payable for the balance. d. Borrowed $4,700 cash by signing a short-term note payable. e. Paid $53,625 cash to reduce the long-term notes payable. f. Issued 3.200 shares of common stock for $20 cash per share. g. Declared and paid cash dividends of $51,500. Required: 1. Prepare a complete statement of cash flows, report its operating activities using the indirect method. (Amounts to be dedu should be indicated with a minus sign.) FORTEN COMPANY Statement of Cash Flows For Year Ended December 31, 2018 Cash flows from operating activities Net income 112.175 Adjustments to reconcile net income to net cash provided by operations Income statement items not affecting cash Depreciation expense 27.750 Loss on disposal of equipment 12.125 Anetmonte to rarnnrile not inramo to nat roe neid hwnnoratione Required information Loss on disposal of equipment 12,125 (18,715) (27,356) 755 (65,034) Changes in current assets and current liabilities Accounts receivable increase Inventory increase Prepaid expense decrease Accounts payable decrease Notes payable long-term increase Net cash provided by operating activities Cash flows from investing activities Cash received from sale of equipment Cash paid for equipment 41,700 28,625 (44,000) (15.375) Net cash provided by investing activities Cash flows from financing activities: Cash paid for dividends Cash paid on long-term note Cash received from issuing stock (51 500) (53.625) 64.000 Required information 41,700 Net cash provided by operating activities Cash flows from investing activities Cash received from sale of equipment Cash paid for equipment 28,625 (44,000) (15,375) Net cash provided by investing activities Cash flows from financing activities: Cash paid for dividends Cash paid on long-term note Cash received from issuing stock (51,500) (53,625) 64,000 HT Net cash provided by financing activities Net increase (decrease) in cash Cash balance at December 31, 2017 Cash balance at December 31, 2018 $ 14 (41.125) (14.800) (20.100) (34.900) $