Required information Use the following information for the Problems below. (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 $ 78,400 94,460 304,156 1,400 478,416 138,500 (46,125) $570, 791 $ 92,500 69,625 270,800 2,275 435, 200 127,000 (55,500) $506, 700 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 $ 72,141 15,700 87,841 55,500 143, 341 $143, 175 9,800 152,975 67, 750 220, 725 191,250 66,000 170, 200 $570,791 169,250 0 116,725 $506, 700 $677,500 304,000 373,500 FORTEN COMPANY Income Statement For Current Year Ended December 31 Sales Cost of goods sold Gross profit Operating expenses Depreciation expense $ 39,750 Other expenses 151,400 Other gains (losses) Loss on sale of equipment Income before taxes Income taxes expense Net income 191,150 (24,125) 158, 225 50,850 $107,375 Additional Information on Current Year Transactions a. The loss on the cash sale of equipment was $24,125 (details in b). b. Sold equipment costing $103,875, with accumulated depreciation of $49,125, for $30,625 cash. c. Purchased equipment costing $115,375 by paying $68,000 cash and signing a long-term note payable for the balance. d. Borrowed $5,900 cash by signing a short-term note payable. e. Paid $59,625 cash to reduce the long-term notes payable. f. Issued 4,400 shares of common stock for $20 cash per share. g. Declared and paid cash dividends of $53,900. Required: 1. Prepare a complete statement of cash flows using the indirect method for the current year. (Amounts to be deducted shoul 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 Net income 107,375 Adjustments to reconcile net income to net cash provided by operations: Accounts payable decrease x (24,835) Inventory increase (33,356) Prepaid expense decrease 875 Accounts payable decrease (71,034) Depreciation expense 39,750 Loss on disposal of equipment 24,125 $ 42,900 Net cash provided by operating activities Cash flows from investing activities Cash received from sale of equipment Cash paid for equipment 30,625 (68,000) (37.375) Adjustments to reconcile net income to net cash provided by operations: Accounts payable decrease (24,835) Inventory increase (33,356) Prepaid expense decrease 875 Accounts payable decrease (71,034) Depreciation expense 39,750 Loss on disposal of equipment 24, 125 $ 42,900 Net cash provided by operating activities Cash flows from investing activities Cash received from sale of equipment Cash paid for equipment 30,625 (68,000) (37,375) Cash flows from financing activities: Cash borrowed on short-term note Cash paid on long-term note Cash received from issuing stock Cash paid for dividends OOO 5,900 (59,625) 88,000 (53,900) Net increase (decrease) in cash Cash balance at December 31, prior year Cash balance at December 31, current year (19,625) $ (14,100) 92,500 $ 78,400 FORTEN COMPANY Statement of Cash Flows For Current Year Ended December 31 Cash flows from operating activities Net income $ 0 Cash flows from investing activities 0 Cash flows from financing activities 0 $ 0 Net increase (decrease) in cash Cash balance at December 31, prior year Cash balance at December 31, current year $ 0