Question

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 $66,400 $ 84,500 Accounts receivable 82,380 61,625 Inventory 292,156262,800 Prepaid expenses 1,320 2,115 Total current assets 442,256411,040 Equipment 146,500 119,000 Accum. depreciation—Equipment(42,125 ) (51,500 ) Total assets $ 546,631 $ 478,540 Liabilitiesand Equity Accounts payable $ 64,141 $ 131,175 Short-term notespayable 13,300 8,200 Total current liabilities 77,441 139,375Long-term notes payable 59,500 59,750 Total liabilities 136,941199,125 Equity Common stock, $5 par value 184,750 161,250 Paid-incapital in excess of par, common stock 48,500 0 Retained earnings176,440 118,165 Total liabilities and equity $ 546,631 $ 478,540FORTEN COMPANY Income Statement For Year Ended December 31, 2017Sales $ 637,500 Cost of goods sold 296,000 Gross profit 341,500Operating expenses Depreciation expense $ 31,750 Other expenses143,400 175,150 Other gains (losses) Loss on sale of equipment(16,125 ) Income before taxes 150,225 Income taxes expense 39,650Net income $ 110,575 Additional Information on Year 2017Transactions The loss on the cash sale of equipment was $16,125(details in b). Sold equipment costing $79,875, with accumulateddepreciation of $41,125, for $22,625 cash. Purchased equipmentcosting $107,375 by paying $52,000 cash and signing a long-termnote payable for the balance. Borrowed $5,100 cash by signing ashort-term note payable. Paid $55,625 cash to reduce the long-termnotes payable. Issued 3,600 shares of common stock for $20 cash pershare. Declared and paid cash dividends of $52,300.

Required: 1. Prepare a complete statement of cash flows; reportits operating activities using the indirect method. (Amounts to bededucted should be indicated with a minus sign.)