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 , (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 FORTEN COMPANY Comparative Balance Sheets December 31 Current Year Prior Year Assets Cash $ 78,400 $ 92,500 Accounts receivable 94,460 69,625 Inventory 304,156 270,800 Prepaid expenses 1,400 2,275 Total current assets 478,416 435,200 Equipment 138,500 127,000 Accum. depreciation-Equipment (46,125) (55,500) Total assets $570,791 $506,700 Liabilities and Equity Accounts payable $ 72,141 $143, 175 Short-term notes payable 15,700 9,800 Total current liabilities 87,841 152,975 Long-term notes payable 55,500 67,750 Total liabilities 143,341 220,725 Equity Common stock, $5 par value 191,250 169,250 Paid-in capital in excess of par, common stock 66,000 @ Retained earnings 170,200 116,725 Total liabilities and equity $570, 791 $506,700 $677,500 304,000 373,500 FORTEN COMPANY Income Statement For Current Year Ended December 31 Sales Cost of goods sold Gross profit Operating expenses Depreciation expense $ 39,750 Other expenses 151,400 Other gains (losses) Loss on sale of equipment Income before taxes Income taxes expense Net income 191,150 (24,125) 158, 225 50,850 $107,375 Additional Information on Current Year Transactions a. The loss on the cash sale of equipment was $24.125 (details in b). b. Sold equipment costing $103.875, with accumulated depreciation of $49,125, for $30,625 cash. Purchased equipment costing $115.375 by paying $68,000 cash and signing a long-term note payable for the balance. d. Borrowed $5.900 cash by signing a short-term note payable. e. Pald $59,625 cash to reduce the long-term notes payable f. Issued 4,400 shares of common stock for $20 cash per share. 9. Declared and paid cash dividends of $53,900. For Current Year Ended December 31 Cash flows from operating activities Net income $ 107,375 Adjustments to reconcile net income to net cash provided by operations: Depreciation expense $ 107,375 Cash flows from investing activities 0 Cash flows from financing activities: 0 $ 107,375 Net increase (decrease) in cash Cash balance at December 31, prior year Cash balance at December 31, current year $ 107,375