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 $ 57,400 73,320 283, 156 1,260 415, 136 152,500 (39, 125) $ 528,511 $ 78,500 55,625 256,800 1,995 392,920 113,000 (48,500) $ 457,420 Assets Cash Accounts receivable Inventory Prepaid expenses Total current assets Equipment Accum. depreciation-Equipment Total assets Liabilities and Equity Accounts payable Short-term notes payable Total current liabilities 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 $ 58,141 11,500 69,641 62,500 132, 141 $ 122, 175 7,000 129, 175 53,750 182,925 155, 250 170,250 45,000 181,120 $528,511 119,245 $457,420 $607,500 290,000 317,500 FORTEN COMPANY Income Statement For Current Year Ended December 31 Sales Cost of goods sold Gross profit Operating expenses Depreciation expense $ 25,750 Other expenses 137,400 Other gains (losses) Loss on sale of equipment Income before taxes Income taxes expense Net income 163,150 (10,125) 144, 225 31, 250 $112,975 Additional Information on Current Year Transactions a. The loss on the cash sale of equipment was $10,125 (details in b). b. Sold equipment costing $61,875, with accumulated depreciation of $35,125, for $16,625 cash. C. Purchased equipment costing $101,375 by paying $40,000 cash and signing a long-term note payable for the balance. d. Borrowed $4,500 cash by signing a short-term note payable. e. Paid $52,625 cash to reduce the long-term notes payable. f. Issued 3,000 shares of common stock for $20 cash per share. g. Declared and paid cash dividends of $51,100. FORTEN COMPANY Spreadsheet for Statement of Cash Flows For Current Year Ended December 31 Analysis of Changes December 31, Prior Year Debit Credit December 31, Current Year Balance sheetdebit Cash 57,400 Accounts receivable Inventory 78,500 55,625 256,800 1,995 113,000 505,920 Prepaid expenses Equipment 57,400 Balance sheet-credit Accumulated depreciation Equipment 48,500 122,175 7,000 53,750 Accounts payable Short-term notes payable Long-term notes payable Common stock, $5 par value Paid-in capital in excess of par value, common stock Retained earnings 155,250 01 119,245 505,920 Statement of cash flows Operating activities Investing activities Financing activities Non cash investing and financing activities Purchase of equipment financed by long-term note payable 0 $