Required Prepare the operating activities section of the statement of cash flows using the direct method for the current year. Problem 12-3A Indirect: Statement of cash flows Q A1 QP2 @ P3 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, and (4) all debits to Accounts Payable reflect cash payments for inventory. FORTEN COMPANY Income Statement For Current Year Ended December 31 Sales $582,500 285,000 297,500 Cost of goods sold Gross profit Operating expenses (excluding depreciation) Depreciation expense Other gains (losses) Loss on sale of equipment Income before taxes $132,400 20,750 153,150 (5,125) 139,225 24,250 $114,975 Income taxes expense Net income FORTEN COMPANY Comparative Balance Sheets At December 31 Current Year Prior Year Assets Cash $ 49,800 $ 73,500 Accounts receivable 65,810 50,625 275,656 251,800 Inventory Prepaid expenses 1,250 1,875 Total current assets 392,516 Equipment Accum. depreciation Equipment 157,500 (36,625) $513,391 377,800 108,000 (46,000) $439,800 Total assets Liabilities and Equity Accounts payable $ 53,141 $114,675 75,000 54,750 Long-term notes payable Total liabilities 128,141 169,425 162,750 150,250 Equity Common stock, $5 par value Paid-in capital in excess of par, common stock Retained earnings Total liabilities and equity 37,500 185,000 120,125 $513,391 $439,800 Required 1. Prepare a complete statement of cash flows using the indirect method for the current year. Disclose any noncash investing and financing activities in a note. Check Cash from operating activities, $40,900 Analysis Component 2. Analyze and discuss the statement of cash flows prepared in part 1, giving special attention to the wisdom of the cash dividend payment