Refer to the information reported about Forten Company in Problem .

Required

Prepare a complete statement of cash flows using a spreadsheet as in Exhibit 16A.1; report its operating activities using the indirect method. Identify the debits and credits in the Analysis of Changes columns with letters that correspond to the following list of transactions and events.

a. Net income was $114,975. b. Accounts receivable increased. c. Inventory increased. d. Prepaid expenses decreased. e. Accounts payable decreased. f. Depreciation expense was $20,750. g. Sold equipment costing $46,875, with accumulated depreciation of $30,125, for $11,625 cash. This yielded a loss of $5,125. h. Purchased equipment costing $96,375 by paying $30,000 cash and (i.) by signing a long-term notepayable for the balance. j. Borrowed $4,000 cash by signing a short-term note payable. k. Paid $50,125 cash to reduce the long-term notes payable. l. Issued 2,500 shares of common stock for $20 cash per share. m. Declared and paid cash dividends of $50,100.

FORTEN COMPANY Comparative Balance Sheets December 31, 2017 and 2016 2017 2016 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, $5 par value 49,800$ 73,500 50,625 275,656 251,800 1.875 392,516 377,800 157,500 108,000 (36,625) (46,000) $513,391 $439,800 65,810 1,250 1,0 FORTEN COMPANY Income Statement For Year Ended December 31, 2017 Sales Cost of goods sold Gross profit... Operating expenses $582,500 285,000 297,500 $ 53,141 $114,675 10,000 6000 63,141 120,675 65,000 48,750 Depreciation expense Other expenses s 20,750 128,141 169,425 132,400 153,150 Other gains (losses) 162,750 150,250 (5.125)Paid-in capital in excess of par, Income before taxes Income taxes expense.... Net income 139,225 24,250 $114,975 common stock Retained earnings Total liabilities and equity.... 37,500 185,000120.125 $513,391 $439,800