Problem 12-3A Indirect: Statement of cash flows LO A1, P1, P2, P3 Forten Company, a merchandiser, recently completed its calendar-year 2015 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 and balance sheets follow FORTEN COMPANY Comparative Balance Sheets December 31, 2015 and 2014 2015 2014 Assets Cash Accounts receivable Inventory Prepaid expenses $ 63,909 74,225 265,156 68,500 57,625 237,800 1,925 1,460 Total current assets Equipment Accum. depreciation-Equipment 404,750 155,325 (46,450) (53,000) 365,850 113,000 Total assets $513,625 $425,850 Liabilities and Equity Accounts payable Short-term notes payable $ 58,775 $110,150 8,600 5,300 Total current liabilities Long-term notes payable 67,375 33,025 115,450 Total liabilities Equity Common stock, $5 par value Paid-in capital in excess of par, common stock Retained earnings 39,500 154,950 148,250 122,650 $513,625 $425,850 100,400 162,250 42,000 208,975 Total liabilities and equity FORTEN COMPANY Income Statement For Year Ended December 31, 2015 Sales Cost of goods sold $617,500 299,000 318,500 Gross profit Operating expenses $ 19,300 Depreciation expense Other expenses 129,100 148,400 Other gains (losses) Loss on sale of equipment (4,325) Income before taxes Income taxes expense 165,775 29,250 Net income $136,525