Required information [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 Sales Cost of goods sold Gross profit For Current Year Ended December 31 $ 652,500 299,000 353,500 $146,400 34,750 181,150 (19,125) Operating expenses (excluding depreciation) Depreciation expense Other gains (losses) Loss on sale of equipment Income before taxes Income taxes expense Net income 153,225 43,850 $ 109,375 Assets Cash Accounts receivable Inventory Prepaid expenses FORTEN COMPANY Comparative Balance Sheets December 311 Current Year Prior Year $ 70,900 86,910 296,656 $87,500 64,625 265,800 1,350 2,175 Assets Cash Accounts receivable Inventory Prepaid expenses Total current assets Equipment Accumulated depreciation-Equipment Total assets Liabilities and Equity Accounts payable Long-term notes payable FORTEN COMPANY Comparative Balance Sheets December 31 Current Year Prior Year $ 70,900 86,910 $ 87,500 64,625 265,800 296,656 1,350 2,175 455,816 420,100 143,500 122,000 (43,625) (53,000) $ 555,691 $489,100 $ 67,141 $ 135,675 72,200 71,550 Total liabilities 139,341 207,225 Equity Common stock, $5 par value 183,750 164,250 Paid-in capital in excess of par, common stock 58,500 Retained earnings 174,100 117,625 Total liabilities and equity $555,691 $489,100 Additional Information on Current Year Transactions a. The loss on the cash sale of equipment was $19,125 (details in b). b. Sold equipment costing $88,875, with accumulated depreciation of $44,125, for $25,625 cash. c. Purchased equipment costing $110,375 by paying $58,000 cash and signing a long-term notes payable for the balance. d. Paid $51,725 cash to reduce the long-term notes payable. e. Issued 3,900 shares of common stock for $20 cash per share. f. Declared and paid cash dividends of $52.900. Statement of Cash Flows For Current Year Ended December 31 Cash flows from operating activities Cash received from customers Cash paid for inventory Cash paid for operating expenses Cash paid for income taxes Net cash provided by operating activities Cash flows from investing activities Cash paid for equipment Net cash used in investing activities Cash flows from financing activities Cash received from issuing stock Cash paid for dividends Cash paid on long-term notes Net cash used in financing activities Net increase (decrease) in cash 630,215 (398,390) (145,575) (43,850) 69 $ 42,400 0 0 $ 42,400 Cash balance at December 31, prior year Cash balance at December 31, current year $ 42,400