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, (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 Assets Cash Accounts receivable $ 87, 580 64,625 265,800 2,175 Inventory Prepaid expenses Total current assets Equipment Accum. depreciation-Equipment $ 79,900 86,910 296,656 1,350 455,816 143, see (43,625) $ 555, 691 420,180 122,000 (53,000) $ 489,180 Total assets $ 67,141 Liabilities and Equity Accounts payable Short-term notes payable Total current liabilities Long-term notes payable 14,280 81,341 58,00 $ 135,675 8,888 144,475 62,750 Total liabilities 139,341 207, 225 164, 250 Equity Common stock, $5 par value Paid-in capital in excess of par, common stock Retained earnings 183,750 58,500 174,100 117,625 Total liabilities and equity $ 555, 691 $ 489,180 FORTEN COMPANY Income Statement For Current Year Ended December 31 $ 652,580 299,000 353, 580 Sales Cost of goods sold Gross profit Operating expenses Depreciation expense Other expenses Other gains (losses) Loss on sale of equipment Income before taxes $ 34,750 146,400 181,150 Income taxes expense (19,125) 153, 225 43,850 $ 109, 375 Net income FORTEN COMPANY Income Statement For Current Year Ended December 31 $ 652,580 299,000 353,500 Sales Cost of goods sold Gross profit Operating expenses Depreciation expense Other expenses Other gains (losses) Loss on sale of equipment $ 34,750 146,480 181,150 (19,125) Income before taxes 153, 225 43,850 Income taxes expense Net income $ 109, 375 Additional Information on Current Year Transactions a. The loss on the cash sale of equipment was $19,125 (details in b). b. Sold equipment costing $88,875, with accumulated depreciation of $44,125, for $25,625 cash. c. Purchased equipment costing $110,375 by paying $58,000 cash and signing a long-term note payable for the balance. d. Borrowed $5,400 cash by signing a short-term note payable. e. Pald $57,125 cash to reduce the long-term notes payable. f. Issued 3,900 shares of common stock for $20 cash per share. g. Declared and pald cash dividends of $52,900. Answer is not complete. FORTEN COMPANY Statement of Cash Flows For Current Year Ended December 31 Cash flows from operating activities Net income Adjustments to reconcile net income to net cash provided by operations: Depreciation expense Loss on disposal of equipment Accounts receivable increase Inventory increase Prepaid expense decrease Accounts payable decrease IS 0 Cash flows from investing activities Cash received from sale of equipment Cash paid for equipment 0 Cash flows from financing activities: Cash received from issuing stock Cash paid for dividends Cash borrowed on short-term note (53,500) X 5.400 Cash paid on long-term note (57,125) Net cash used in financing activities Net increase (decrease) in cash Cash balance at December 31. prior year Cash balance at December 31, current year (105,225) $ (105,225) $ (105,225)