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) $ 632,500 295,000 337,500 $ 142,400 30,750 173,150 Loss on sale of equipment Income before taxes (15,125) Income taxes expense Net income Assets FORTEN COMPANY Comparative Balance Sheets December 31 Cash Accounts receivable Prepaid expenses Inventory Total current assets Equipment Accumulated depreciation-Equipment Total assets Liabilities and Equity Accounts payable Long-term notes payable Total liabilities Equity 149,225 38,250 $ 110,975 Current Year Prior Year $ 64,900 80,870 290,656 $ 83,500 60,625 261,800 1,310 2,095 408,020 118,000 437,736 147,500 (41,625) $ 543,611 $ 63,141 73,000 136,141 177,750 (51,000) $ 475,020 $ 129,675 66,750 196,425 160,250 0 Common stock, $5 par value Paid-in capital in excess of par, common stock Retained earnings Total liabilities and equity Additional Information on Current Year Transactions 52,500 177,220 118,345 $ 543,611 $ 475,020 a. The loss on the cash sale of equipment was $15,125 (details in b). b. Sold equipment costing $76,875, with accumulated depreciation of $40,125, for $21,625 cash. c. Purchased equipment costing $106,375 by paying $50,000 cash and signing a long-term notes payable for the balance. d. Paid $50,125 cash to reduce the long-term notes payable. e. Issued 3,500 shares of common stock for $20 cash per share. f. Declared and paid cash dividends of $52,100. Required: 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 Net income Adjustments to reconcile net income to net cash provided by operations: Income statement items not affecting cash Depreciation expense Changes in current assets and current liabilities Increase in accounts receivable Decrease in inventory Decrease in prepaid expenses 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 $ 110,975 $ 110,975 0 0 $ 110,975 $ 110,975