(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 $ 60,400 76,340 286, 156 1,280 424,176 150,500 (40,125) $ 534,551 $ 80,500 57,625 258, 800 2,035 398,960 115,000 (49,500) $ 464,460 Assets Cash Accounts receivable Inventory Prepaid expenses Total current assets Equipment Accum. depreciation-Equipment Total assets Liabilities and Equity Accounts payable 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 $ 60, 141 12,100 72,241 $ 125, 175 7,400 132,575 55,750 188,325 61,500 133, 741 157,250 173,250 48,000 179,560 $ 534,551 118,885 $ 464,460 $ 617,500 292,000 325,500 FORTEN COMPANY Income Statement For Current Year Ended December 31 Sales Cost of goods sold Gross profit Operating expenses Depreciation expense $ 27,750 Other expenses 139,400 Other gains (losses) Loss on sale of equipment Income before taxes Income taxes expense Net income 167,150 (12,125) 146,225 34,050 $ 112,175 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 note payable for the balance. d. Borrowed $4,700 cash by signing a short-term note payable. e. Paid $53,625 cash to reduce the long-term notes payable. f. Issued 3,200 shares of common stock for $20 cash per share. g. Declared and paid cash dividends of $51,500. FORTEN COMPANY Statement of Cash Flows For Current Year Ended December 31 Cash flows from operating activities Net income Adjustments to reconcile net income to net cash provided by operations: Depreciation expense Loss on disposal of equipment Accounts receivable increase Inventory increase Prepaid expense decrease Accounts payable decrease $ 0 Net cash provided by operating activities Cash flows from investing activities Cash received from sale of equipment Cash paid for equipment 0 Cash flows from financing activities: Cash borrowed on short-term note Cash paid on long-term note Cash received from issuing stock Cash paid for dividends $ 0 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 $ $ 0