Forten Company, a merchandiser, recently completed its calendar-year 2017 operations. 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. The company’s income statement and balance sheets follow. FORTEN COMPANY
Comparative Balance Sheets
December 31, 2017 and 2016
2017 2016
Assets
Cash$58,900 $79,500
Accounts receivable 74,830 56,625
Inventory 284,656 257,800
Prepaid expenses 1,270 2,015
Total current assets 419,656 395,940
Equipment 151,500 114,000
Accum. depreciation—Equipment (39,625) (49,000)
Total assets$531,531 $460,940
Liabilities and Equity
Accounts payable$59,141 $123,675
Short-term notes payable 11,800 7,200
Total current liabilities 70,941 130,875
Long-term notes payable 62,000 54,750
Total liabilities 132,941 185,625
Equity
Common stock, $5 par value 174,750 156,250
Paid-in capital in excess of par, common stock 43,500 0
Retained earnings 180,340 119,065
Total liabilities and equity$531,531 $460,940

FORTEN COMPANY
Income Statement
For Year Ended December 31, 2017
Sales $612,500
Cost of goods sold 291,000
Gross profit 321,500
Operating expenses
Depreciation expense$26,750
Other expenses 138,400 165,150
Other gains (losses)
Loss on sale of equipment (11,125)
Income before taxes 145,225
Income taxes expense 32,650
Net income $112,575
Additional Information on Year 2017 Transactions

The loss on the cash sale of equipment was $11,125 (details in b).

Sold equipment costing $64,875, with accumulated depreciation of $36,125, for $17,625 cash.

Purchased equipment costing $102,375 by paying $42,000 cash and signing a long-term note payable for the balance.

Borrowed $4,600 cash by signing a short-term note payable.

Paid $53,125 cash to reduce the long-term notes payable.

Issued 3,100 shares of common stock for $20 cash per share.

Declared and paid cash dividends of $51,300.

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

FORTEN COMPANYStatement of Cash FlowsFor Year Ended December 31, 2017Cash flows from operating activitiesAdjustments to reconcile net income to net cash provided by operations:Cash flows from investing activitiesCash flows from financing activities:Net increase (decrease) in cashCash balance at beginning of yearCash balance at end of year