[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, and (4) all debits to Accounts Payable reflect cash payments for inventory. FORTEN COMPANY Income Statement For Current Year Ended December 31 Sales Cost of goods sold Gross profit Operating expenses (excluding depreciation) $ 139,400 Depreciation expense Other gains (losses) $ 617,500 292,000 325,500 27,750 167,150 Loss on sale of equipment Income before taxes (12,125) 146,225 Income taxes expense Net income 34,050 $ 112,175 FORTEN COMPANY Comparative Balance Sheets December 31 Current Year Prior Year $ 60,400 76,340 286,156 $ 80,500 57,625 258,800 Assets Cash Accounts receivable Inventory Prepaid expenses Total current assets Equipment Accumulated depreciation-Equipment Total assets Liabilities and Equity Accounts payable Long-term notes payable 1,280 2,035 424,176 398,960 150,500 115,000 (40,125) (49,500) $ 534,551 $ 464,460 $ 60,141 $ 125,175 Total liabilities Equity Common stock, $5 par value Paid-in capital in excess of par, common stock Retained earnings Total liabilities and equity 73,600 133,741 173,250 48,000 179,560 $ 534,551 63,150 188,325 157,250 0 118,885 $ 464,460 Additional Information on Current Year Transactions a. The loss on the cash sale of equipment was $12,125 (details in b). b. Sold equipment costing $67,875, with accumulated depreciation of $37,125, for $18,625 cash. c. Purchased equipment costing $103,375 by paying $44,000 cash and signing a long-term notes payable for the balance. d. Paid $48,925 cash to reduce the long-term notes payable. e. Issued 3,200 shares of common stock for $20 cash per share. f. Declared and paid cash dividends of $51,500. Required: 1. Prepare a complete statement of cash flows using the indirect method for the current year. Note: Amounts to be deducted should be indicated with a minus sign. ! Required information For Current Year Ended December 31 Cash flows from operating activities Net income Adjustments to reconcile net income to net cash provided by operations: Income statement items not affecting cash Depreciation expense Loss on disposal of equipment Changes in current assets and current liabilities Increase in accounts receivable Decrease in prepaid expenses Increase in inventory Decrease in accounts payable Net cash provided by operating activities Cash flows from investing activities Cash received from sale of equipment Cash paid for equipment Cash flows from financing activities: Cash borrowed on short-term note 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 69 $ 0 0 0 $ 0 $ 0