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. PORTEN COMPANY Income Statement For Current Year Ended December 31 Sales Cost of goods sold Gross profit Operating expenses (excluding depreciation) $ 141,400 Depreciation expense 29,750 Other gains (losses) Loss on sale of equipment Income before taxes Income taxes expense Net income $ 627,500 294,000 333,500 171,150 14,125) 148, 225 36,850 $ 111,375 FORTEN COMPANY Comparative Balance Sheets December 31 Current Year Prior Year Assets Cash Accounts receivable Inventory Prepaid expenses Total current assets Equipment Accumulated depreciation-Equipment Total assets Liabilities and Equity Accounts payable Long-term notes payable Total liabilities Equity Common stock, $5 par value Paid-in capital in excess of par, common stock Retained earnings Total liabilities and equity $ 63, 400 79,360 289, 156 1,300 433,216 148,500 (41,125) $ 540,591 $ 82,500 59,625 260,800 2,075 405,000 117,000 (50,500) $ 471,500 $ 62,141 73,200 135,341 $ 128,175 65,550 193,725 176,250 51,000 178,000 $ 540,591 159, 250 0 118,525 $ 471,500 Additional Information on Current Year Transactions a. The loss on the cash sale of equipment was $14,125 (details in b). b. Sold equipment costing $73,875, with accumulated depreciation of $39,125, for $20,625 cash. c. Purchased equipment costing $105,375 by paying $48,000 cash and signing a long-term notes payable for the balance d. Paid $49,725 cash to reduce the long-term notes payable. e. Issued 3,400 shares of common stock for $20 cash per share. f. Declared and paid cash dividends of $51.900. FORTEN COMPANY Spreadsheet for Statement of Cash Flows For Current Year Ended December 31 December 31, Prior Analysis of Changes Year Debit Credit December 31, Current Year $ s 63,400 Balance sheet-debit Cash Accounts receivable Inventory Prepaid expenses Equipment 82,500 59,625 260,800 2,075 117,000 522,000 $ $ 63,400 $ Balance sheet-credit Accumulated depreciation Equipment Accounts payable Long-term notes payable Common stock, 35 par value Pald-in capital in excess of par value, common stock Retained earnings 50,500 128,175 65,550 159 250 0 118,525 522.000 $ $ 0 Statement of cash flows Operating activities $ Balance sheet-credit Accumulated depreciation--Equipment Accounts payable Long-term notos payable Common stock, $5 par value Paid-in capital in excess of par value. common stock Retained earnings 50,500 128,175 65,550 159,250 0 118,525 522,000 $ $ 0 Statement of cash flows Operating activities Investing activities Financing activities
