[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) Depreciation expense Other gains (losses) Loss on sale of equipment $ 652,500 299,000 353,500 $146,400 34,750 181,150 (19,125) Income before taxes Income taxes expense Net income FORTEN COMPANY Comparative Balance Sheets Assets Cash Accounts receivable Inventory Prepaid expenses Total current assets Equipment Accumulated depreciation-Equipment Total assets Liabilities and Equitv December 31 153,225 43,850 $ 109,375 Current Year Prior Year $ 70,900 86,910 296,656 $87,500 64,625 265,800 1,350 2,175 455,816 420,100 143,500 122,000 (43,625) $ 555,691 (53,000) $489,100 Prev 9 1 2 www of 2 Next FORTEN COMPANY Comparative Balance Sheets December 31 Current Year Prior Year 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 Total liabilities Equity Common stock, $5 par value Paid-in capital in excess of par, common stock Retained earnings Total liabilities and equity Additional Information on Current Year Transactions $ 70,900 86,910 296,656 $87,500 64,625 265,800 1,350 2,175 455,816 420,100 143,500 122,000 (43,625) (53,000) $ 555,691 $489,100 $ 67,141 $ 135,675 72,200 139,341 71,550 207,225 183,750 164,250 58,500 e 174,100 117,625 $ 555,691 $489,100 a. The loss on the cash sale of equipment was $19,125 (details in b). b. Sold equipment costing $88,875, with accumulated depreciation of $44,125, for $25,625 cash. c. Purchased equipment costing $110,375 by paying $58,000 cash and signing a long-term notes payable for the balance. d. Paid $51,725 cash to reduce the long-term notes payable. e. Issued 3,900 shares of common stock for $20 cash per share. f. Declared and paid cash dividends of $52,900. Required information FORTEN COMPANY Statement of Cash Flows For Current Year Ended December 31 Cash flows from operating activities Net income $ 109,375 Adjustments to reconcile net income to net cash provided by operations: Income statement items not affecting cash Loss on disposal of equipment (19,125) 32,750 Depreciation expense Changes in current assets and current liabilities Increase in accounts receivable Increase in inventory Decrease in prepaid expenses 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 Net cash used in investing activities Cach finue from financing activitiae (21,265) (29,856) 805 (67,534) $ 5,150 23,625 (54,000) (30,375) Required information 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 Net cash used in investing activities Cash flows from financing activities: (67,534) Cash paid on long-term notes Cash received from issuing stock Cash paid for dividends 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 $ 5,150 23,625 (54,000) (30,375) (50,925) 74,000 (52,500) (29,425) $ (54,650) 85,500 $ 30,850 Required information FORTEN COMPANY Statement of Cash Flows For Current Year Ended December 31 Cash flows from operating activities Cash received from customers Cash paid for inventory Cash paid for operating expenses Cash paid for income taxes Net cash provided by operating activities Cash flows from investing activities Cash paid for equipment $ 0 Net cash used in investing activities Cash flows from financing activities Cash received from issuing stock Cash paid for dividends Cash paid on long-term notes Net cash used in financing activities Net increase (decrease) in cash Cash balance at December 31 prior vear 0 0 0