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 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 1,250 $ 49,800 65,810 275,656 $ 73,500 50,625 251,800 1,875 392,516 377,800 157,500 108,000 (36,625) (46,000) $513,391 $439,800 $ 53,141 $114,675 10,000 6,000 63,141 120,675 65,000 48,750 Total liabilities 128,141 169,425 Equity Common stock, $5 par value 162,750 150,250 Paid-in capital in excess of par, common stock 37,500 0 Retained earnings 185,000 120,125 Total liabilities and equity $513,391 $439,800 FORTEN COMPANY Income Statement For Year Ended December 31, 2017 Sales $582,500 Cost of goods sold 285,000 Gross profit 297,500 Operating expenses Depreciation expense Other expenses Other gains (losses). $ 20,750 132,400 153,150 Loss on sale of equipment (5,125) Income before taxes Income taxes expense Net income 139,225 24,250 $114,975