Check my work Check My Work button is now enabled2Item 4 Item 4 10 points Forten Company, a merchandiser, recently completed its calendar-year 2015 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 companys income statement and balance sheets follow. FORTEN COMPANY Comparative Balance Sheets December 31, 2015 and 2014 2015 2014 Assets Cash $49,800 $73,500 Accounts receivable, net 65,810 50,625 Inventory 275,656 251,800 Prepaid expenses 1,250 1,875 Equipment 157,500 108,000 Accum. depreciationEquipment (36,625) (46,000) Total assets $513,391 $439,800 Liabilities and Equity Accounts payable $53,141 $114,675 Short-term notes payable 10,000 6,000 Notes payable (long term) 65,000 48,750 Common stock, $5 par value 162,750 150,250 Paid-in capital in excess of par, common stock 37,500 0 Retained earnings 185,000 120,125 Total liabilities and equity $513,391 $439,800 FORTEN COMPANY Income Statement For Year Ended December 31, 2015 Sales $582,500 Cost of goods sold 285,000 Gross profit 297,500 Operating expenses Depreciation expense $20,750 Other expenses 132,400 Total operating expenses 153,150 144,350 Other gains (losses) Loss on sale of equipment (5,125) Income before taxes 139,225 Income taxes expense 24,250 Net income $114,975 Additional Information on Year 2015 Transactions: a. The loss on the cash sale of equipment was $5,125 (details in b). b. Sold equipment costing $46,875, with accumulated depreciation of $30,125, for $11,625 cash. c. Purchased equipment costing $96,375 by paying $30,000 cash and signing a long-term note payable for the balance. d. Borrowed $4,000 cash by signing a short-term note payable. e. Paid $50,125 cash to reduce the long-term notes payable. f. Issued 2,500 shares of common stock for $20 cash per share. g. Declared and paid cash dividends of $50,100.