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. $ 667,500 302,000 365,500 FORTEN COMPANY Income Statement For Current Year Ended December 31 Sales Cost of goods sold Gross profit Operating expenses (excluding depreciation) $ 149,400 Depreciation expense 37,750 Other gains (losses) Loss on sale of equipment Income before taxes Income taxes expense Net income 187,150 (22,125) 156, 225 48,050 $ 108, 175 FORTEN COMPANY Comparative Balance Sheets December 31 Current Year Prior Year $ 75,400 91,440 301,156 1,380 469,376 140,500 (45,125) $ 564,751 $ 90,500 67,625 268,800 2,235 429,160 125,000 (54,500) $ 499,660 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 $ 70,141 71,600 141,741 $ 140, 175 75,150 215, 325 188,250 63,000 171,760 $ 564,751 167, 250 0 117,085 $ 499,660 Additional Information on Current Year Transactions a. The loss on the cash sale of equipment was $22,125 (details in b). b. Sold equipment costing $97,875, with accumulated depreciation of $47,125, for $28,625 cash. c. Purchased equipment costing $113,375 by paying $64,000 cash and signing a long-term notes payable for the balance. d. Paid $52,925 cash to reduce the long-term notes payable. e. Issued 4,200 shares of common stock for $20 cash per share. f. Declared and paid cash dividends of $53,500. FORTEN COMPANY Spreadsheet for Statement of Cash Flows For Current Year Ended December 31 Analysis of Changes December 31, Prior Year December 31, Current Year Debit Credit Balance sheetdebit Cash $ 75,400 90,500 67,625 Accounts receivable 268,800 Inventory Prepaid expenses Equipment 2,235 125,000 554,160 75,400 Balance sheet-credit $ 54,500 Accumulated depreciationEquipment Accounts payable Long-term notes payable Common stock, $5 par value Paid-in capital in excess of par value, common stock Retained earnings 140,175 75,150 167,250 0 117,085 554,160 $ $ 0 Statement of cash flows Operating activities Investing activities Financing activities Non cash investing and financing activities Purchase of equipment financed by long-term notes payable $ 4 0