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, (4) all debits to Accounts Payable reflect cash payments for inventory, and (5) Other Expenses are paid in advance and are initially debited to Prepaid Expenses. 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 FORTEN COMPANY Comparative Balance Sheets December 31 Total liabilities Equity Common stock, $5 par value Paid-in capital in excess of par, common stock Retained earnings Total liabilities and equity Current Year $ 70,900 86,910 296,656 1,350 455,816 143,500 (43,625) $555,691 $ 67,141 14,200 81,341 58,000 139,341 183,750 58,500 174,100 $555,691 FORTEN COMPANY Income Statement For Current Year Ended December 31 Sales $652,500 Cost of goods sold 299,000 Gross profit 353,500 Operating expenses Depreciation expense Other expenses $ 34,750 146,400 181,150 Other gains (losses) Loss on sale of equipment (19,125) Income before taxes 153,225 Income taxes expense 43,850 Net income $109,375 Additional Information on Current Year Transactions a. The loss on the cash sale of equipment was $10,125 (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 note payable for the balance. d. Borrowed $5,400 cash by signing a short-term note payable. e. Paid $57,125 cash to reduce the long-term notes payable. f. Issued 3,900 shares of common stock for $20 cash per share. g. Declared and paid cash dividends of $52,900. 1. Prepare a complete statement of cash flows using the indirect method for the current year. (Amounts to be deducted should be indicated with a minus sign.) FORTEN COMPANY Statement of Cash Flows For Current Year Ended December 31 Cash flows from operating activities Adjustments to reconcile net income to net cash provided by operations: Cash flows from investing activities Cash flows from financing activities: Required information Cash flows from investing activities Cash flows from financing activities: Net increase (decrease) in cash Cash balance at December 31, prior year Cash balance at December 31, current year + 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, (4) all debits to Accounts Payable reflect cash payments for inventory, and (5) Other Expenses are paid in advance and are initially debited to Prepaid Expenses. FORTEN COMPANY Comparative Balance Sheets December 31 Current Year Prior Year 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 $ 70,900 86,910 296,656 $ 87,500 64,625 265,800 2,350 2,175 455,816 420,100 143,500 122,000 (43,625) (53,000) $555,691 $489,100 $ 67,141 $135,675 14,200 8,800 81,341 144,475 58,000 62,750 139,341 207,225 Equity Common stock, $5 par value 183,750 164,250 Paid-in capital in excess of par, common stock 58,500 0 Retained earnings 174,100 117,625 Total liabilities and equity $555,691 $489,100