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 $622,500 293,000 329,500 FORTEN COMPANY Income Statement For Current Year Ended December 31 Sales Cost of goods sold Gross profit Operating expenses (excluding depreciation) $ 140,400 Depreciation expense 28,750 Other gains (losses) Loss on sale of equipment Income before taxes Income taxes expense Net Income 169,150 (1) 125) 147,225 35,450 $ 111,775 FORTEN COMPANY Comparative Balance Sheets December 31 Current Year Prior Year Assets Cash $ 61,900 $ 81,500 FUTURE Comparative Balance Sheets December 31 Current Year Prior Year Assets Cash $ 61,900 $ 81,500 Accounts receivable 77,850 58,625 Inventory 287,656 259,800 Prepaid expenses 1,290 2,055 Total current assets 428,696 481,980 Equipment 149,500 116,000 Accumulated depreciation Equipment (40,625) (50,000 Total assets $ 537,571 $ 467,980 Liabilities and Equity Accounts payable $ 61,141 $ 126,675 Long-term notes payable 23,400 64,350 Total liabilities 134,541 191,025 Equity Common stock, $5 par value 174,750 158,250 Paid-in capital in excess of par, common stock 49,500 Retained earnings 178, 780 118,705 Total liabilities and equity $ 537,571 $ 467,980 Additional Information on Current Year Transactions o. The loss on the cash sale of equipment was $13,125 (details in b). b. Sold equipment costing $70,875, with accumulated depreciation of $38,125, for $19,625 cash. c. Purchased equipment costing $104,375 by paying $46,000 cash and signing a long-term notes payable for the balance d. Paid $49.325 cash to reduce the long-term notes payable. Issued 3,300 shares of common stock for $20 cash per share. 0 Required information neyuncu. 1. Prepare a complete statement of cash flows using the indirect method for the current year. (Amounts to be deducted should be indicated with a minus sign.) Answer is not complete. FORTEN COMPANY Statement of Cash Flows For Current Year Ended December 31 Cash flows from operating activities Not income $ Adjustments to reconcile net income to net cash provided by operations Income statement items not affecting cash Depreciation expense 111,775 28,750 Changes in current assets and current liabilities Increase in accounts receivable Increase in inventory Decrease in prepaid expenses Decrease in accounts payable Loss on disposal of equipment OOOO (19,225) (27 856) 765 (65 534) 13, 125 X Required information 765 O 12 (65,534) 13,125 Decrease in prepaid expenses Decrease in accounts payable Loss on disposal of equipment Net cash provided by operating activities Cash flows from investing activities Cash paid on long-term notes Cash received from sale of equipment $ 41.800 (46,000) 19,625 (26,375) Net cash used in investing activities Cash flows from financing activities Cash borrowed on short term note Cash received from issuing stock Cash paid for dividends O (49,325) 66,000 (51 700) Net cash used in financing activities Not increase (decrease in cash Cash balance at December 31, prior year Cash balance at December 31, current year (35,025) $ (19,600) 81,500 S 61,900