[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 Prior Year FORTEN COMPANY Comparative Balance Sheets December 31 Current Year Assets Cash $ 54,400 Accounts receivable 70,310 Inventory 280,156 Prepaid expenses 1,280 Total current assets 406,146 Equipment 154,500 Accum. depreciation-Equipment (38,125) Total assets $522,521 Liabilities and Equity Accounts payable $ 56,141 Short-term notes payable 10,900 Total current liabilities 67,041 Long-term notes payable 63,500 Total liabilities 130,541 Equity Common stock, $5 par value 167,250 Paid-in capital in excess of par, common stock 42,000 Retained earnings 182,730 Total liabilities and equity $522,521 $ 76,500 53,625 254,800 2,005 386,930 111,000 (47.500) $450, 430 $119,175 6,600 125,775 51,750 177.525 153,250 0 119,655 $450, 430 PORTEN COMPANY Income Statement For Current Year Ended December 31 Sales $597,500 Cost of goods sold 288,000 Gross profit 309,500 Operating expenses Depreciation $ 23,750 expense Other expenses 135,400 159,150 Other gains (losses) Loss on sale of (8,125) equipment Income before taxes 142,225 Income taxes expense 28,450 Net income $113,775 Additional Information on Current Year Transactions a. The loss on the cash sale of equipment was $8,125 (details in ) b. Soid equipment costing $55,875, with accumulated depreciation of $33.125, for $14,625 cash. c. Purchased equipment costing $99,375 by paying $36,000 cash and signing a long-term note payable for the balance, d. Borrowed $4.300 cash by signing a short-term note payable. e. Pald $51.625 cash to reduce the long-term notes payable. f. Issued 2,800 shares of common stock for $20 cash per share. 9. Declared and paid cash dividends of $50.700. FORTEN COMPANY Statement of Cash Flows For Current Year Ended December 31 Cash flows from operating activities Net income $ 113,775 Adjustments to reconcile net income to net cash provided by operations: Depreciation expense 23,750 Loss on disposal of equipment 8,125 Accounts payable increase Accounts receivable increase 16,685 Inventory increase Prepaid expense decrease Accounts payable decrease Net cash provided by operating activities $ 179,020 Cash flows from investing activities Cash received from sale of equipment Cash paid for equipment 0 Net cash provided by investing activities Cash flows from financing activities: Notes payable long-term increase Cash received from issuing stock Cash paid for dividends Net cash provided by financing activities Net increase (decrease) in cash Cash balance at December 31, prior year Cash balance at December 31, current year 0 $ 179,020 $ 179,020