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 Recelvable 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 Decemfer 31 $ 592,500 287,000 305,500 $ 134,400 22,750 157,150 Sales Cost of goods sold Gross profit Operating expenses (excluding depreciation) Depreciation expense Other gains (losses) Lons on sale of equipment Income before taxes Income taxes expense Net income 7,125) 141,225 27,050 $ 114,175 YORTEN COMPANY Comparative Balance Sheets December 31 Current Year Prior Year $ 52,900 68,810 278,656 1,270 401,636 155,500 (27.625) $ 519,511 $ 75,500 52,625 253,800 1.995 383,920 110,000 (47000) $ 446,920 Assets Cash Accounts receivable nventor Prepaid expenses Total current assets Equipment Accumulated depreciation Equipment Total assets Liabilities and Equity Accounts payable Long-term note payable Total liabilities Equity Common stock, $5 par value Paid in capital in excess of par, common stock Retained earnings Total liabilities and equity $ 55,141 74,600 129,741 $ 117,675 57,150 174,825 165,750 40,500 183,520 $ 519,511 152,250 0 119.845 $ 446,920 Additional Information on Current Year Transactions a. The loss on the cash sale of equipment was $7,125 (details in b). b. Sold equipment costing $52,875, with accumulated depreciation of $32,125, for $13,625 cash. c. Purchased equipment costing $98,375 by paying $34,000 cash and signing a long-term notes payable for the balance d. Paid $46,925 cash to reduce the long-term notes payable. e. Issued 2,700 shares of common stock for $20 cash per share. 1. Declared and paid cash dividends of $50.500. 1. Declared and paid Required: Prepare a complete statement of cash flows using the direct method. (Amounts to be ded sign.) FORTEN COMPANY Statement of Cash Flows For Current Year Ended December 31 Cash flows from operating activities $ 0 Cash flows from investing activities 0 Cash flows from financing activities 0 0 Net increase (decrease) in cash Cash balance at December 31, prior year Cash balance at December 31, current year $