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 $ 662,500 Cost of goods sold 301,000 Gross profit 361,500 Operating expenses (excluding depreciation) $ 148,400 Depreciation expense 36,750 185,150 Other gains (losses) Loss on sale of equipment (21,125) Income before taxes 155,225 Income taxes expense 46,650 Net income $ 108,575 FORTEN COMPANY Comparative Balance Sheets December 31 Current Year Prior Year Assets Cash $ 73,900 $ 89,500 Accounts receivable 89,930 66,625 Inventory 299,656 267,800 Prepaid expenses 1,370 2,215 Total current assets 464,856 426,140 Equipment 141,500 124,000 Accumulated depreciationEquipment (44,625) (54,000) Total assets $ 561,731 $ 496,140 Liabilities and Equity Accounts payable $ 69,141 $ 138,675 Long-term notes payable 71,800 73,950 Total liabilities 140,941 212,625 Equity Common stock, $5 par value 186,750 166,250 Paid-in capital in excess of par, common stock 61,500 0 Retained earnings 172,540 117,265 Total liabilities and equity $ 561,731 $ 496,140 Additional Information on Current Year Transactions The loss on the cash sale of equipment was $21,125 (details in b). Sold equipment costing $94,875, with accumulated depreciation of $46,125, for $27,625 cash. Purchased equipment costing $112,375 by paying $62,000 cash and signing a long-term notes payable for the balance. Paid $52,525 cash to reduce the long-term notes payable. Issued 4,100 shares of common stock for $20 cash per share. Declared and paid cash dividends of $53,300. 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 $89,500 not attempted 15,600selected answer incorrect $73,900 Accounts receivable 66,625 $23,305selected answer correct not attempted 89,930 Inventory 267,800 31,856selected answer correct not attempted 299,656 Prepaid expenses 2,215 not attempted $845selected answer correct 1,370 Equipment 124,000 112,375selected answer correct 94,875selected answer correct 141,500 $550,140 $606,356 Balance sheetcredit Accumulated depreciationEquipment $54,000 46,125selected answer correct 36,750selected answer correct $44,625 Accounts payable 138,675 69,534selected answer correct not attempted 69,141 Long-term notes payable 73,950 52,525selected answer correct not attempted 21,425 Common stock, $5 par value 166,250 not attempted 20,500selected answer correct 186,750 Paid-in capital in excess of par value, common stock 0 not attempted 61,500selected answer correct 61,500 Retained earnings 117,265 53,300selected answer correct 108,575selected answer correct 172,540 $550,140 $555,981 Statement of cash flows Operating activities Investing activities not ted not attempted not attempted Financing activities Non cash investing and financing activities Purchase of equipment financed by long-term notes payable not attempted not attempted $389,020 $338,645