value: 2.50 points Forten Company, a merchandiser, recently completed its calendar-year 2013 operations. 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. The company's balance sheets and income statement follow FORTEN COMPANY Comparative Balance Sheets December 31, 2013 and 2012 2013 2012 Assets Cash Accounts receivable Merchandise inventory Prepaid expenses Equipment Accum. depreciation-Equipment $ 39,274 65,000 54,125 244,800 1,750 106,000 (39,100) (46,000) 69,325 270,406 1,320 148,150 Total assets $489,375 $425,675 Liabilities and Equity Accounts payable Short-term notes payable Long-term notes payable Common stock, $5 par value Paid-in capital in excess of par, common stock Retained earnings $ 59,475 $109,100 4,600 36,000 146,500 7,200 34,875 157,000 31,500 199,325 129,475 Total liabilities and equity $489,375 $425,675 FORTEN COMPANY Income Statement For Year Ended December 31, 2013 Sales Cost of goods sold $600,000 292,000 Gross profit Operating expenses 308,000 Depreciation expense $ 18,600 Other expenses 140,500 159,100 Other gains (losses) Loss on sale of equipment (4,150) Income before taxes Income taxes expense 144,750 27,500 Net income $ 117,250