Use the following information for the Problems below. [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 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 284,656 $ 58,900 74,830 $ 79,500 56,625 257,800 1,270 2,015 419,656 395,940 151,500 114,000 (39,625) (49,000) $531,531 $460,940 $ 59,141 $123,675 11,800 7,200 70,941 130,875 62,000 54,750 Total liabilities 132,941 185,625 Equity Common stock, $5 par value 171,750 156,250 Paid-in capital in excess of par, common stock 46,500 8 Retained earnings 180,340 119,065 Total liabilities and equity $531,531 $460,940 FORTEN COMPANY Income Statement For Current Year Ended December 31 Sales Cost of goods sold Gross profit Operating expenses Depreciation expense Other expenses Other gains (losses) Loss on sale of equipment Income before taxes Incone taxes expense Net income $612,500 291,000 321,500 $ 26,758 138,400 165,150 (11,125) 145,225 32.650 $112,575 Additional Information on Current Year Transactions a. The loss on the cash sale of equipment was $11125 (details in b) b. Sold equipment costing $64,875, with accumulated depreciation of $36,125, for $17,625 cash c. Purchased equipment costing $102,375 by paying $42,000 cash and signing a long-term note payable for the balance. d. Borrowed $4,600 cash by signing a short-term note payable e. Paid $53125 cash to reduce the inno-term notes navable