Use the following Information for the Problems below. (Algo) [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 $ 677,500 304,000 373,500 $ 151,400 39,750 191,150 (24,125) Income before taxes Income taxes expense Net income FORTEN COMPANY Comparative Balance Sheets December 31 158,225 50,850 $ 107,375 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 $ 78,400 94,460 384,156 $ 92,500 69,625 270,800 1,400 2,275 478,416 435,200 127,000 138,500 (46,125) $ 570,791 (55,500) $ 506,700 $ 143,175 77,550 220,725 $ 72,141 71,200 143,341 191,250 169,250 66,000 170,200 116,725 $ 570,791 $ 506,700 a. The loss on the cash sale of equipment was $24,125 (details in by. b. Sold equipment costing $103,875, with accumulated depreciation of $49,125, for $30,625 cash. c. Purchased equipment costing $115,375 by paying $68,000 cash and signing a long-term notes payable for the balance. d. Paid $53,725 cash to reduce the long-term notes payable. e. Issued 4,400 shares of common stock for $20 cash per share. f. Declared and paid cash dividends of $53,900. Problem 12-3A (Algo) Indirect: Statement of cash flows LO A1, P2, P3 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. FORTEN COMPANY Statement of Cash Flows For Current Year Ended December 31 Cash flows from operating activities Net income 107,375 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 39,750 (24,125) Increase in accounts receivable Increase in inventory Decrease in prepaid expenses Decrease in accounts payable (24,835) (34,156) 875 (71,034) Net cash used in operating activities $ (8,150) Cash flows from investing activities Cash paid for equipment (68,000) Cash received from sale of equipment 30,625 Net cash used in investing activities (37,375) Cash flows from financing activities: Cash paid on long-term notes Cash paid for dividends (53,725) (53,900) 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 (107,625) $ (151,150) $ 92,500 (58,650)