Problem 16-3AB Direct: Statement of cash flows LO P1, P3, P5 Forten Company, a merchandiser, recently completed its calendar-year 2013 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 balance sheets and inoome statement follow company's FORTEN COMPANY Comparative Balance Sheets December 31, 2013 and 2012 2013.11-2012. Assets Cash $ 49,00073,000 54,000 275,500251,500 1,900 157,500108,000 30,125)(40,000) 65,830 Prepaid expenses Equipment Accum. depreciation-Equipment 1,250 Total assets 518,955$ 448,400 Liabilities and Equity Accounts payable Short-term notes payable Long-term notes payable Common stock, $5 par value Paid-in capital in excess of par-mmon stock Retained eanings $ 55,330$115,000 7,000 65,00049,000 162,500150,250 10,000 36,750 189.375127,150 518,955$448,400 Total liabilities and equity FORTEN COMPANY Income Statement For Year Ended December 31, 2013 $ 584,000 286,000 Cost of goods sold Gross profit Operating expenses 298,000 Depreciation expense S 20,000 Other expenses 132,800152.800 Other gains (losses) Loss on sale of equipment (5.125) Income before taxes Income taxes expense 140,075 24,250 Net income S 115,825