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 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 $ 582,500 Cost of goods sold 285,000 Gross profit 297,500 Operating expenses (excluding depreciation) $ 132,400 Depreciation expense 20,750 153,150 Other gains (losses) Loss on sale of equipment (5,125) Income before taxes 139,225 Income taxes expense 24,250 Net income $ 114,975 FORTEN COMPANY Comparative Balance Sheets December 31 Current Year Prior Year Assets Cash $ 49,800 $ 73,500 Accounts receivable 65,810 50,625 Inventory 275,656 251,800 Prepaid expenses 1,250 1,875 Total current assets 392,516 377,800 Equipment 157,500 108,000 Accumulated depreciationEquipment (36,625) (46,000) Total assets $ 513,391 $ 439,800 Liabilities and Equity Accounts payable $ 53,141 $ 114,675 Long-term notes payable 75,000 54,750 Total liabilities 128,141 169,425 Equity Common stock, $5 par value 162,750 150,250 Paid-in capital in excess of par, common stock 37,500 0 Retained earnings 185,000 120,125 Total liabilities and equity $ 513,391 $ 439,800 Additional Information on Current Year Transactions The loss on the cash sale of equipment was $5,125 (details in b). Sold equipment costing $46,875, with accumulated depreciation of $30,125, for $11,625 cash. Purchased equipment costing $96,375 by paying $30,000 cash and signing a long-term notes payable for the balance. Paid $46,125 cash to reduce the long-term notes payable. Issued 2,500 shares of common stock for $20 cash per share. Declared and paid cash dividends of $50,100