Required information Use the following information for the Problems below Forten Company, a merchandiser, recently completed its calendar-year 2017 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 income statement and balance sheets follow. FORTEN COMPANY Comparative Balance Sheets December 31, 2017 and 2016 2017 2016 Assets Cash Accounts receivable Inventory Prepaid expenses Total current assets Equipment Accum. depreciation-Equipment Total assets $ 49,800 73,500 50,625 251,800 1,875 65,810 275,656 1,250 377,800 108,000 (36,625) (46,000 $.513,391 439,800 392,516 157, 500 Liabilities and Equity Accounts payable Short-term notes payable Total current liabilities Long-term notes payable Total 1iabilities Equity Common stock, $5 par value Paid-in capital in excess of par, common stock Retained earnings $ 53,141 10,000 63,141 65,000 114,675 6,000 120,675 48,750 169,425 128, 141 162,750 185,00012012 150,250 37,500 Total liabilities and equity $ 513, 391 $ 439,800 FORTEN COMPANY Income Statement For Year Ended December 31, 2017 Sales Cost of goods sold Gross profit Operating expenses $ 582,500 285,000 297, 500 Depreciation expense $ 20,750 132,400 Other expenses Other gains (losses) 153.150 Loss on sale of equipment Income before taxes Income taxes expense Net income 5,125 139,225 24,250 $114,975 Additional Information on Year 2017 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 FORTEN COMPAN Statement of Cash Flows For Year Ended December 31, 2017 Cash flows from operating activities Net income $114,975 Adjustments to reconcile net income to net cash provided by operations 20,750 01 Depreciation expense Loss on disposal of equipment Accounts receivable increase Inventory increase Prepaid expense decrease Accounts payable decrease Notes payable long-term increase 5,125 (15,185) (23,856) 625 (61,534) 4,000 $ 44,900 Cash flows from investing activities Cash paid for equipment Cash received from sale of equipment 11.625 (30,000) (18,375) Cash flows from financing activities Cash received from issuing stock Cash paid on long-term note Cash paid for dividends 50,000 (50,125) (50,100)