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Required information Skip to question [The following information applies to the questions displayed below.] Forten Company's current year income statement, comparative balance sheets, and additional

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[The following information applies to the questions displayed below.] Forten Company's current year income statement, comparative balance sheets, and additional information follow. 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, and (4) all debits to Accounts Payable reflect cash payments for inventory.

FORTEN COMPANY
Income Statement
For Current Year Ended December 31
Sales $ 642,500
Cost of goods sold 297,000
Gross profit 345,500
Operating expenses (excluding depreciation) $ 144,400
Depreciation expense 32,750 177,150
Other gains (losses)
Loss on sale of equipment (17,125)
Income before taxes 151,225
Income taxes expense 41,050
Net income $ 110,175

FORTEN COMPANY
Comparative Balance Sheets
December 31
Current Year Prior Year
Assets
Cash $ 67,900 $ 85,500
Accounts receivable 83,890 62,625
Inventory 293,656 263,800
Prepaid expenses 1,330 2,135
Total current assets 446,776 414,060
Equipment 145,500 120,000
Accumulated depreciationEquipment (42,625) (52,000)
Total assets $ 549,651 $ 482,060
Liabilities and Equity
Accounts payable $ 65,141 $ 132,675
Long-term notes payable 72,600 69,150
Total liabilities 137,741 201,825
Equity
Common stock, $5 par value 180,750 162,250
Paid-in capital in excess of par, common stock 55,500 0
Retained earnings 175,660 117,985
Total liabilities and equity $ 549,651 $ 482,060

Additional Information on Current Year Transactions

The loss on the cash sale of equipment was $17,125 (details in b).

Sold equipment costing $82,875, with accumulated depreciation of $42,125, for $23,625 cash.

Purchased equipment costing $108,375 by paying $54,000 cash and signing a long-term notes payable for the balance.

Paid $50,925 cash to reduce the long-term notes payable.

Issued 3,700 shares of common stock for $20 cash per share.

Declared and paid cash dividends of $52,500.

FORTEN COMPANY
Spreadsheet for Statement of Cash Flows
For Current Year Ended December 31
December 31, Prior Year Analysis of Changes December 31, Current Year
Debit Credit
Balance sheetdebit
Cash $85,500 $67,900
Accounts receivable 62,625
Inventory 263,800
Prepaid expenses 2,135
Equipment 120,000
$534,060 $67,900
Balance sheetcredit
Accumulated depreciationEquipment $52,000
Accounts payable 132,675
Long-term notes payable 69,150
Common stock, $5 par value 162,250
Paid-in capital in excess of par value, common stock 0
Retained earnings 117,985
$534,060 $0
Statement of cash flows
Operating activities
Investing activities
Financing activities
Non cash investing and financing activities
Purchase of equipment financed by long-term notes payable
$0 $0

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