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.

FORTEN COMPANY Comparative Balance Sheets December 31
	Current Year						Prior Year
Assets
Cash		$	52,900					$	75,500
Accounts receivable			68,810						52,625
Inventory			278,656						253,800
Prepaid expenses			1,270						1,995
Total current assets			401,636						383,920
Equipment			155,500						110,000
Accum. depreciationEquipment			(37,625	)					(47,000	)
Total assets		$	519,511					$	446,920
Liabilities and Equity
Accounts payable		$	55,141					$	117,675
Short-term notes payable			10,600						6,400
Total current liabilities			65,741						124,075
Long-term notes payable			64,000						50,750
Total liabilities			129,741						174,825
Equity
Common stock, $5 par value			165,750						152,250
Paid-in capital in excess of par, common stock			40,500						0
Retained earnings			183,520						119,845
Total liabilities and equity		$	519,511					$	446,920

FORTEN COMPANY Income Statement For Current Year Ended December 31
Sales				$	592,500
Cost of goods sold					287,000
Gross profit					305,500
Operating expenses
Depreciation expense	$	22,750
Other expenses		134,400			157,150
Other gains (losses)
Loss on sale of equipment					(7,125	)
Income before taxes					141,225
Income taxes expense					27,050
Net income				$	114,175

Additional Information on Current Year Transactions

1. The loss on the cash sale of equipment was $7,125 (details in b).
2. Sold equipment costing $52,875, with accumulated depreciation of $32,125, for $13,625 cash.
3. Purchased equipment costing $98,375 by paying $34,000 cash and signing a long-term note payable for the balance.
4. Borrowed $4,200 cash by signing a short-term note payable.
5. Paid $51,125 cash to reduce the long-term notes payable.
6. Issued 2,700 shares of common stock for $20 cash per share.
7. Declared and paid cash dividends of $50,500.

Required information [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. FORTEN COMPANY Comparative Balance Sheets December 31 Current Year Prior Year Assets Cash $ 52,900 $ 75,500 Accounts receivable 68,810 52,625 Inventory 278,656 253,800 Prepaid expenses 1,270 1,995 Total current assets 401,636 383,920 Equipment 155,500 110,000 Accum. depreciation-Equipment (37.625) (47,000) Total assets $519,511 $446,920 Liabilities and Equity Accounts payable $ 55,141 $117,675 Short-term notes payable 10,680 6,400 Total current liabilities 65,741 124,075 Long-term notes payable Total liabilities 64,000 50,750 Equity 129,741 174,825 Connon stock, $5 par value Paid-in capital in excess of par, common stock 165,750 152, 250 40,500 Retained earnings 183,520 119,845 Total liabilities and equity $519,511 5446,920 FORTEN COMPANY Income Statement For Current Year Ended December 31 Sales Cost of goods sold 5592,500 287,000 ework ** 10,600 65,741 64,000 129,741 44 6,400 124,875 50,750 174,825 ALCULS payouts Short-term notes payable Total current liabilities 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 152,250 165,750 40,500 183,520 $519,511 119,845 $446,920 $592,500 287,000 305,500 FORTEN COMPANY Income Statement For Current Year Ended December 31 Sales Cost of goods sold Gross profit Operating expenses Depreciation expense $ 22,750 Other expenses 134,400 Other gains (losses) Loss on sale of equipment Income before taxes Income taxes expense Net income 157, 150 (7,125) 141,225 27,050 $114,175 Additional Information on Current Year Transactions a. The loss on the cash sale of equipment was $7,125 (details in b). b. Sold equipment costing $52,875, with accumulated depreciation of $32,125, for $13,625 cash. c. Purchased equipment costing $98,375 by paying $34,000 cash and signing a long-term note payable for the ba d. Borrowed $4.200 cash by signing a short-term note payable. e. Pald $51,125 cash to reduce the long-term notes payable. f. Issued 2,700 shares of common stock for $20 cash per share. g. Declared and paid cash dividends of $50,500. Required information Statement of Cash Flows For Current Year Ended December 31 Cash flows from operating activities Net income $ 114,175 Adjustments to reconcile net income to net cash provided by operations: Depreciation expense 22,750 Loss on disposal of equipment 7.125 Accounts receivable increase Inventory increase Prepaid expense decrease Accounts payable decrease $ 144,050 Cash flows from investing activities Cash paid for equipment Cash received from sale of equipment Cash flows from financing activities: 0 Net increase (decrease) in cash Cash balance at December 31, prior year Cash balance at December 31, current year $ 0 144.050 $ 144.050