1. Prepare a complete statement of cash flows using the indirect method for the current year. Note: Amounts to be deducted should be indicated with a minus sign. Cash flows from operating activities FORTEN COMPANY Statement of Cash Flows For Current Year Ended December 31 Adjustments to reconcile net income to net cash provided by operations: Income statement items not affecting cash Changes in current assets and current liabilities Cash flows from investing activities Cash flows from financing activities: Net increase (decrease) in cash. Cash balance at December 31, prior year. $ 0 0 0 $ 0 Sales Cost of goods sold Gross profit FORTEN COMPANY Income Statement For Current Year Ended December 31 Operating expenses (excluding depreciation) Depreciation expense Other gains (losses) Loss on sale of equipment Income before taxes Income taxes expense Net income $ 637,500 296,000 341,500 $ 143,400 31,750 175,150 (16,125) 150,225 39,650 $ 110,575 FORTEN COMPANY Comparative Balance Sheets December 31 Current Year Prior Year Assets Cash Accounts receivable Inventory Prepaid expenses Total current assets Equipment Accumulated depreciation-Equipment Total assets Liabilities and Equity Accounts payable Long-term notes payable Total liabilities Equity Common stock, $5 par value Paid-in capital in excess of par, common stock Retained earnings Total liabilities and equity Additional Information on Current Year Transactions $ 66,400 82,380 $ 84,500 61,625 262,800 292,156 1,320 2,115 442,256 411,040 146,500 (42,125) $ 546,631 $ 64,141 72,800 136,941 179,250 119,000 (51,500) $ 478,540 $ 131,175 67,950 199,125 161,250 54,000 0 176,440 118,165 $ 546,631 $ 478,540 a. The loss on the cash sale of equipment was $16,125 (details in b). b. Sold equipment costing $79,875, with accumulated depreciation of $41,125, for $22,625 cash. c. Purchased equipment costing $107,375 by paying $52,000 cash and signing a long-term notes payable for the balance. d. Paid $50,525 cash to reduce the long-term notes payable. e. Issued 3,600 shares of common stock for $20 cash per share. f. Declared and paid cash dividends of $52,300.