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Forten Company, a merchandiser, recently completed its calendar-year 2017 operations. For the year, (1) all sales are credit sales, (2) all credits to Accounts Receivable reflect cash recelpts 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 Prepald Expenses. The company's Income statement and balance sheets follow. FORTEN COMPANY Comparative Balance Sheets December 31, 2017 and 2016 2017 2016 & $ 49,800 65,810 275,656 1,250 392,516 157,500 (36,525) $ 513,391 $ 73,500 59,625 251,889 1,875 377,899 198,888 (46,039) $ 439,800 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, 35 par value Paid-in capital in excess of par, common stock Retained earnings Total liabilities and equity $ 53,141 10,300 63,141 65,000 128, 141 S 114.675 6,809 120,675 48,750 169,425 150, 258 162, 75 37,599 185.990 120,125 $ 439,800 $ 513,391 $ 582,500 285,099 297,500 FORTEN COMPANY Income Statement For Year Ended December 31, 2017 Sales Cost of goods sold Gross profit Operating expenses Depreciation expense $ 29,750 Other expenses 132,400 Other gains (losses) Loss on sale of equipment Income before taxes Income taxes expense 153,159 (5,125) 139,225 24, 259 $ 114,925 Net income 27 a. Net Income was $114,975. b. Accounts receivable Increased. C. Inventory Increased. d. Prepaid expenses decreased. e. Accounts payable decreased. 1. Depreciation expense was $20.750. g. Sold equipment costing $46,875, with accumulated depreciation of $30.125. for $11,625 cash. This ylelded a loss of $5125. h. Purchased equipment costing $96,375 by paying $80,000 cash and (I.) by signing a long-term note payable for the balance 1. Borrowed $4.000 cash by signing a short-term note payable. J. Pald 550,125 cash to reduce the long-term notes payable. k. Issued 2,500 shares of common stock for $20 cash per share. 1. Declared and paid cash dividends of $50,100. Reculred: Piedusu EL TUTOLLenen uran riuws For Year Ended December 31, 2017 Analysis of Changes December 31, 2016 Debit Credit December 31, 2017 Balance sheetdebit Cash $ 70.500 s 49.800 Accounts receivable 50.625 Inventory Prepaid expenses 251,800 1,875 108,000 485,800 Equipment Balance sheet credit E 46.000 Accumulated depreciation-Equipment 114.675 Accounts payable 6.000 Short-term hores payable Long-term notes payable 48.750 150.250 Common stock 35 par value Paid-in capital in excess of par value common stock 120.125 Retained earnings 5 435.800 Statement of cash flows Operating activities Statement of cash flows Operating activities Investing activities Financing activities Non cash investing and financing activities Purchase of equipment financed by long-term note payable