Refer to the information in Exercise 12-12. Using the direct method, prepare the statement of cash flows for the year ended June 30, 2020. Hint: Prepaid Expenses and Wages Payable relate to Operating Expenses on the income statement.

Exercise 12-12.

The following financial statements and additional information are reported. 

(1) Prepare a statement of cash flows using the indirect method for the year ended June 30, 2020. 

(2) Compute the company’s cash flow on total assets ratio for fiscal year 2020.

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IKIBAN INC. IKIBAN INC. Income Statement Comparative Balance Sheets For Year Ended June 30, 2020 At June 30 2020 2019 Sales $678,000 Assets Cost of goods sold 411,000 $ 87,500 $ 44,000 Cash.... Gross profit..... 267,000 Accounts receivable, net 65,000 51,000 Operating expenses (excluding depreciation) . 67,000 Inventory... 63,800 86,500 Depreciation expense. 58,600 Prepaid expenses. 4,400 5,400 141,400 Total current assets 220,700 186,900 Other gains (losses) Equipment.... 124,000 115,000 Gain on sale of equipment.. 2,000 Accum. depreciation-Equipment... (27,000) Income before taxes... (9,000) $292,900 143,400 Total assets.. $317,700 Income taxes expense . 43,890 Liabilitles and Equity Accounts payable.. Wages payable... Income taxes payable.. Net income . $ 99,510 $ 25,000 $ 30,000 6,000 15,000 3,400 3,800 Additional Information Total current liabilities 34,400 48,800 a. A$30,000 note payable is retired at its $30,000 carrying (book) value in exchange for cash. Notes payable (long term) 30,000 60,000 Total liabilities.. 64,400 108,800 b. The only changes affecting retained earnings are net income and cash dividends paid. Equity c. New equipment is acquired for $57,600 cash. Common stock, $5 par value.... Retained earnings.... Total liabilities and equity.. 220,000 160,000 d. Received cash for the sale of equipment that 33,300 24,100 had cost $48,600, yielding a $2,000 gain. $317,700 $292,900 e. Prepaid Expenses and Wages Payable relate to Operating Expenses on the income statement. f. All purchases and sales of inventory are on credit. Check (1b) Cash pald for dividends, $90,310 (1d) Cash recelved from equip. sale, $10,000