Required information Use the following information for the Problems below. The following information applies to the questions displayed below.] Forten Company, a merchandiser, recently completed its calendar-year 2017 operations. 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. The company's income statement and balance sheets follow. FORTEN COMPANY Comparative Balance Sheets December 31, 2017 and 2016 2017 2016 Assets $ 82,500 59,625 260,800 Cash $63,400 79,360 289,156 1,300 433,216 148,500 (41,125) Accounts receivable Inventory Prepaid expenses 2,075 405,000 117,000 (50,500) Total current assets Equipment Accum depreciation-Equipment $540,591 $471,500 Total assets Liabilities and Equity Accounts payable Short-term notes payable Total current liabilities $ 62,141 $128,175 7,800 135,975 57,750 12,700 74,841 60,500 Long-term notes payable Total liabilities Equity Common stock, $5 par value Paid-in capital in excess of par, 135,341 193,725 180,750 46,500 178,000 159,250 0 common stock Retained earnings 118,525 Total liabilities and equity $540,591 $471,500 FORTEN COMPANY Income Statement For Year Ended December 31, 2017 $627,500 294,000 333,500 Sales Cost of goods sold Gross profit Operating expenses Depreciation expense 29,750 141,400 Other expenses 171,150 Other gains (losses) Loss on sale of equipment Income before taxes (14,125) 148,225 36,850 Income taxes expense $111,375 Net income Problem 12-3A Indirect: Statement of cash flows LO A1, P1, P2, P3 Additional Information on Year 2017 Transactions a. The loss on the cash sale of equipment was $14,125 (details in b). b. Sold equipment costing $73,875, with accumulated depreciation of $39,125, for $20,625 cash c. Purchased equipment costing $105,375 by paying $48,000 cash and signing a long-term note payable for the balance. d. Borrowed $4,900 cash by signing a short-term note payable. e. Paid $54,625 cash to reduce the long-term notes payable. f. Issued 3,400 shares of common stock for $20 cash per share. g. Declared and paid cash dividends of $51,900. Required: 1. Prepare a complete statement of cash flows; report its operating activities using the indirect method. (Amounts to be deducted should be indicated with a minus sign.) FORTEN COMPANY Statement of Cash Flows For Year Ended December 31, 2017 Cash flows from operating activities $ Net income 111,375 Adjustments to reconcile net income to net cash provided by operations: Depreciation expense 29,750 Loss on disposal of equipment 14,125 Accounts receivable decrease (15,625) Inventory decrease Prepaid expense increase Accounts payable decrease Cash borrowed on short-term note $ Net cash provided by operating activities 139,625 Cash flows from investing activities Cash received from sale of equipment Cash paid for equipment Net cash provided by investing activities Cash flows from financing activities: Cash received from issuing stock Notes payable long-term decrease Cash paid for dividends Net cash provided by financing activities 0 Net increase (decrease) in cash Cash balance at beginning of year 139,625 $ 139,625 Cash balance at end of year