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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 Comparative Balance Sheets December 31, 2017 and 2016
	2017				2016
Assets
Cash	$	70,900			$	87,500
Accounts receivable		86,910				64,625
Inventory		296,656				265,800
Prepaid expenses		1,350				2,175
Total current assets		455,816				420,100
Equipment		143,500				122,000
Accum.depreciation—Equipment		(43,625	)			(53,000	)
Total assets	$	555,691			$	489,100
Liabilities andEquity
Accounts payable	$	67,141			$	135,675
Short-term notes payable		14,200				8,800
Total current liabilities		81,341				144,475
Long-term notes payable		58,000				62,750
Total liabilities		139,341				207,225
Equity
Common stock, $5 par value		190,750				164,250
Paid-in capital in excess ofpar, common stock		51,500				0
Retained earnings		174,100				117,625
Total liabilities andequity	$	555,691			$	489,100

  

FORTEN COMPANY Income Statement For Year Ended December 31, 2017
Sales				$	652,500
Cost of goods sold					299,000
Gross profit					353,500
Operating expenses
Depreciation expense	$	34,750
Other expenses		146,400			181,150
Other gains (losses)
Loss on sale of equipment					(19,125	)
Income before taxes					153,225
Income taxes expense					43,850
Net income				$	109,375

Problem 12-5AB Direct: Statement of cash flows LO P1, P3, P5

Additional Information on Year 2017Transactions

The loss on the cash sale of equipment was $19,125 (details inb).

Sold equipment costing $88,875, with accumulated depreciation of$44,125, for $25,625 cash.

Purchased equipment costing $110,375 by paying $58,000 cash andsigning a long-term note payable for the balance.

Borrowed $5,400 cash by signing a short-term note payable.

Paid $57,125 cash to reduce the long-term notes payable.

Issued 3,900 shares of common stock for $20 cash per share.

Declared and paid cash dividends of $52,900.

Required:
Prepare a complete statement of cash flows; report its operatingactivities according to the direct method.(Amounts to be deducted should be indicated with a minussign.)