Required information [The following information applies to the questions displayed below.) Forten Company, a merchandiser, recently completed its calendar-year 2018 operations. 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. The company's income statement, balance sheets, and additional information follow. 2017 FORTEN COMPANY Comparative Balance Sheets December 31, 2018 and 2017 2018 Assets Cash $ 66,400 Accounts receivable 82,380 Inventory 292,156 Prepaid expenses 1,320 Total current assets 442, 256 Equipment 146,500 Accum. depreciation-Equipment (42,125) Total assets $546,631 Liabilities and Equity Accounts payable $ 64,141 Short-term notes payable 13,300 Total current liabilities 77,441 Long-term notes payable 59,500 Total liabilities 136,941 Equity Common stock, $5 par value 184,750 Paid-in capital in excess of par, common stock 54,000 Retained earnings 170,940 Total liabilities and equity $546,631 $ 84,500 61,625 262,800 2,115 411,040 119,000 (51,500) $478,540 $131,175 8,200 139,375 59,750 199,125 166,750 0 112,665 $478,540 FORTEN COMPANY Income Statement For Year Ended December 31, 2018 Sales $637,500 Cost of goods sold 296,000 Gross profit 341,500 Operating expenses Depreciation expense$ 31,750 Other expenses 143,400 175, 150 Other gains (losses) Loss on sale of (16, 125) equipment Income before taxes 150,225 Income taxes expense 39,650 Net income $110,575 Additional Information on Year 2018 Transactions a. The loss on the cash sale of equipment was $16,125 (details in b). b. Sold equipment costing $79,875, with accumulated depreciation of $41,125, for $22,625 cash. c. Purchased equipment costing $107,375 by paying $52,000 cash and signing a long-term note payable for the balance. d. Borrowed $5,100 cash by signing a short-term note payable. e. Paid $55,625 cash to reduce the long-term notes payable. f. Issued 3,600 shares of common stock for $20 cash per share. g. Declared and paid cash dividends of $52,300. Required: 1. Prepare a complete statement of cash flows; report its operating activities using the indirect method. (Amounts to be deducted should be indicated with a minus sign.) Additional Information on Year 2018 Transactions a. The loss on the cash sale of equipment was $16,125 (details in b). b. Sold equipment costing $79,875, with accumulated depreciation of $41,125, for $22,625 cash. c. Purchased equipment costing $107,375 by paying $52,000 cash and signing a long-term note payable for the balance. d. Borrowed $5,100 cash by signing a short-term note payable. e. Paid $55,625 cash to reduce the long-term notes payable. f. Issued 3,600 shares of common stock for $20 cash per share. g. Declared and paid cash dividends of $52,300. Required: 1. Prepare a complete statement of cash flows; report its operating activities using the indirect method. (Amounts to be deducted should be indicated with a minus sign.) FORTEN COMPANY Statement of Cash Flows For Year Ended December 31, 2018 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, 2017 Cash balance at December 31, 2018