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 Sales Cost of goods sold Gross profit FORTEN COMPANY Income Statement For Current Year Ended December 31 Operating expenses (excluding depreciation) Depreciation expense Other gains (losses) Loss on sale of equipment Income before taxes Income taxes expense Net income $592,500 287,000 305,500 $134,400 22,750 157,150 (7,125) 141,225 27,050 $114,175 FORTEN COMPANY Comparative Balance Sheets December 31 Current Year Prior Year Assets Cash Accounts receivable Inventory Prepaid expenses 278,656 $ 52,900 68,810 $ 75,500 52,625 253,800 1,270 1,995 Equipment Total current assets Accumulated depreciation-Equipment Total assets Liabilities and Equity 401,636 383,920 155,500 110,000 (37,625) (47,000) $519,511 $ 446,920 Accounts payable $55,141 $117,675 Long-term notes payable. 74,600 Total liabilities 129,741 57,150 174,825 Equity Common stock, $5 par value. 165,750 152,250 Paid-in capital in excess of par, common stock 40,500 Retained earnings 183,520 119,845 Total liabilities and equity $519,511 $ 446,920 Additional Information on Current Year Transactions a. The loss on the cash sale of equipment was $7,125 (details in b) b. Sold equipment costing $52,875, with accumulated depreciation of $32,125, for $13,625 cash. c. Purchased equipment costing $98,375 by paying $34,000 cash and signing a long-term notes payable for the balance. d. Paid $46,925 cash to reduce the long-term notes payable. e. Issued 2,700 shares of common stock for $20 cash per share. 1. Declared and paid cash dividends of $50,500.