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 For Current Year Ended December 31 Sales Cost of goods sold Gross profit Operating expenses (excluding depreciation) Depreciation expense other gains (losses) Loss on sale of equipment Income before taxes Income taxes expense Net income $ 617,500 292,000 325,500 $ 139,400 27,750 167,150 (12,125) 146,225 34,050 $112,175 FORTEN COMPANY Comparative Balance Sheets December 31 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 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 Prior Year $ 60,400 76,340 286,156 $ 80,500 57,625 258,800 1,280 2,035 424,176 150,500 398,960 115,000 (40, 125) $ 534,551 (49,500) $ 464,460 $ 60,141 $ 125,175 73,600 63,150 133,741 188,325 173,250 157,250 48,000 0 179,560 118,885 $ 534,551 $464,460 Additional Information on Current Year Transactions a. The loss on the cash sale of equipment was $12,125 (details in b). b. Sold equipment costing $67,875, with accumulated depreciation of $37,125, for $18,625 cash. c. Purchased equipment costing $103,375 by paying $44,000 cash and signing a long-term notes payable balance. d. Paid $48,925 cash to reduce the long-term notes payable. e. Issued 3,200 shares of common stock for $20 cash per share. f. Declared and paid cash dividends of $51,500. ces For Current Year Ended December 31 Cash flows from operating activities Adjustments to reconcile net income to net cash provided by operations: Income statement items not affecting cash Changes in current assets and current liabilities Cash flows from investing activities Cash flows from financing activities Net increase (decrease) in cash Cash balance at December 31, prior year