Forten Company’s current year income statement, comparative balance sheets, and additional information follow. For the year,…

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

$
72,400

$
88,500

Accounts receivable

88,420

65,625

Inventory

298,156

266,800

Prepaid expenses

1,360

2,195

Total current assets

460,336

423,120

Equipment

142,500

123,000

Accum. depreciation—Equipment

(44,125
)

(53,500
)

Total assets

$
558,711

$
492,620

Liabilities and Equity

Accounts payable

$
68,141

$
137,175

Short-term notes payable

14,500

9,000

Total current liabilities

82,641

146,175

Long-term notes payable

57,500

63,750

Total liabilities

140,141

209,925

Equity

Common stock, $5 par value

185,250

165,250

Paid-in capital in excess of par, common stock

60,000

0

Retained earnings

173,320

117,445

Total liabilities and equity

$
558,711

$
492,620

  

FORTEN COMPANY
Income Statement
For Current Year Ended December 31

Sales

$
657,500

Cost of goods sold

300,000

Gross profit

357,500

Operating expenses

Depreciation expense
$
35,750

Other expenses

147,400

183,150

Other gains (losses)

Loss on sale of equipment

(20,125
)

Income before taxes

154,225

Income taxes expense

45,250

Net income

$
108,975

Additional Information on Current Year Transactions

The loss on the cash sale of equipment was $20,125 (details in
b).
Sold equipment costing $91,875, with accumulated depreciation
of $45,125, for $26,625 cash.
Purchased equipment costing $111,375 by paying $60,000 cash and
signing a long-term note payable for the balance.
Borrowed $5,500 cash by signing a short-term note payable.
Paid $57,625 cash to reduce the long-term notes payable.
Issued 4,000 shares of common stock for $20 cash per
share.
Declared and paid cash dividends of $53,100.

FORTEN COMPANY

Statement of Cash Flows

For Current Year Ended December 31

Cash flows from operating
activities

Net income

Adjustments to reconcile net income to
net cash provided by operations:

$0

Cash flows from investing
activities

0

Cash flows from financing
activities:

0

Net increase (decrease) in cash
$0

Cash balance at December 31, prior
year

Cash balance at December
31, current year
$0