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) $ 597,500 288,000 309,500 $ 135,400 23,750 159,150 Loss on sale of equipment Income before taxes. Income taxes expense Net income (8,125) 142,225 28,450 $113,775 Assets Cash Accounts receivable Inventory Prepaid expenses Total current assets Equipment FORTEN COMPANY Comparative Balance Sheets December 31 Current Year Prior Year $ 54,400 70,310 $ 76,500 53,625 254,800 Accumulated depreciation-Equipment Total assets Liabilities and Equity Accounts payable Long-term notes payable 280,156 1,280 2,005 406,146 386,930 154,500 111,000 (38,125) (47,500) $ 522,521 $ 450,430. $ 56,141 74,400 $ 119,175 58,350