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 $607,500 Cost of goods sold 290,000 Gross profit 317,500 Operating expenses (excluding depreciation) $137,400 Depreciation expense 25,750 163, 150 Other gains (losses) Loss on sale of equipment (10,125) Income before taxes 144,225 Income taxes expense 31,250 Net income $112,975 FORTEN COMPANY Comparative Balance Sheets December 31 Current Year Prior Year Assets Cash Accounts receivable Inventory Prepaid expenses $ 57,400 73,320 283, 156 1,260 $ 78,500 55,625 256,800 1,995 Current Year Prior Year $ 57,400 73,320 283, 156 1,260 415, 136 152,500 (39, 125) $528,511 $ 78,500 55,625 256,800 1,995 392,920 113,000 (48,500) $ 457, 420 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 $ 58,141 11,500 69,641 62,500 132, 141 $122,175 7,000 129, 175 53,750 182,925 170,250 45,000 181, 120 $528,511 155, 250 0 119,245 $ 457, 420 Additional Information on Current Year Transactions a. The loss on the cash sale of equipment was $10,125 (details in b). b. Sold equipment costing $61,875, with accumulated depreciation of $35,125, for $16,625 cash. c. Purchased equipment costing $101,375 by paying $40,000 cash and signing a long-term note payable for the balance. d. Borrowed $4,500 cash by signing a short-term note payable. e. Paid $52,625 cash to reduce the long-term notes payable. f. Issued 3,000 shares of common stock for $20 cash per share. g. Declared and paid cash dividends of $51,100. FORTEN COMPANY Statement of Cash Flows For Current Year Ended December 31 Cash flows from operating activities Adjustments to reconcile net income to net cash provided by operations: Income statement items not affecting cash Changes in current assets and current liabilities $ 0 Cash flows from investing activities 0 $ 0 Cash flows from investing activities 0 Cash flows from financing activities: 0 $ 0 Net increase (decrease) in cash Cash balance at December 31, prior year Cash balance at December 31, current year $ 0