Forten Company, a merchandiser, recently completed itscalendar-year 2017 operations. For the year, (1) all sales arecredit sales, (2) all credits to Accounts Receivable reflect cashreceipts from customers, (3) all purchases of inventory are oncredit, (4) all debits to Accounts Payable reflect cash paymentsfor inventory, and (5) Other Expenses are paid in advance and areinitially debited to Prepaid Expenses. The company’s incomestatement and balance sheets follow. FORTEN COMPANY ComparativeBalance Sheets December 31, 2017 and 2016 2017 2016 Assets Cash$67,900 $85,500 Accounts receivable 83,890 62,625 Inventory 293,656263,800 Prepaid expenses 1,330 2,135 Total current assets 446,776414,060 Equipment 145,500 120,000 Accum. depreciation—Equipment(42,625) (52,000) Total assets $549,651 $482,060 Liabilities andEquity Accounts payable $65,141 $132,675 Short-term notes payable13,600 8,400 Total current liabilities 78,741 141,075 Long-termnotes payable 59,000 60,750 Total liabilities 137,741 201,825Equity Common stock, $5 par value 186,750 162,250 Paid-in capitalin excess of par, common stock 49,500 0 Retained earnings 175,660117,985 Total liabilities and equity $549,651 $482,060 FORTENCOMPANY Income Statement For Year Ended December 31, 2017 Sales$642,500 Cost of goods sold 297,000 Gross profit 345,500 Operatingexpenses Depreciation expense $32,750 Other expenses 144,400177,150 Other gains (losses) Loss on sale of equipment (17,125)Income before taxes 151,225 Income taxes expense 41,050 Net income$110,175 Additional Information on Year 2017 Transactions The losson the cash sale of equipment was $17,125 (details in b). Soldequipment costing $82,875, with accumulated depreciation of$42,125, for $23,625 cash. Purchased equipment costing $108,375 bypaying $54,000 cash and signing a long-term note payable for thebalance. Borrowed $5,200 cash by signing a short-term note payable.Paid $56,125 cash to reduce the long-term notes payable. Issued3,700 shares of common stock for $20 cash per share. Declared andpaid cash dividends of $52,500. Required: 1. Prepare a completestatement of cash flows; report its operating activities using theindirect method.