Use the following financial statements and additional information to (1) prepare a statement of cash flows for the year ended June 30, 2008, using the indirect method, and (2) compute the cash flow on total assets ratio for Ikiban for its fiscal year 2008.

IKIBAN INC.
Comparative Balance Sheets June 30, 2008 and 2007 2008 2007 Assets Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 87,500 $ 44,000 Accounts receivable, net . . . . . . . . . . . . . . 65,000 51,000 Inventory . . . . . . . . . . . . . . . . . . . . . . . . . 63,800 86,500 Prepaid expenses . . . . . . . . . . . . . . . . . . . 4,400 5,400 Equipment . . . . . . . . . . . . . . . . . . . . . . . . 124,000 115,000 Accum. depreciation—Equipment . . . . . . . (27,000) (9,000)
Total assets . . . . . . . . . . . . . . . . . . . . . . . $317,700 $292,900 Liabilities and Equity Accounts payable . . . . . . . . . . . . . . . . . . . $ 25,000 $ 30,000 Wages payable . . . . . . . . . . . . . . . . . . . . . 6,000 15,000 Income taxes payable . . . . . . . . . . . . . . . . 3,400 3,800 Notes payable (long term) . . . . . . . . . . . . . 30,000 60,000 Common stock, $5 par value . . . . . . . . . . . 220,000 160,000 Retained earnings . . . . . . . . . . . . . . . . . . . 33,300 24,100 Total liabilities and equity . . . . . . . . . . . . . $317,700 $292,900 IKIBAN INC.
Income Statement For Year Ended June 30, 2008 Sales . . . . . . . . . . . . . . . . . . . . . . . . . $678,000 Cost of goods sold . . . . . . . . . . . . . . . 411,000 Gross profit . . . . . . . . . . . . . . . . . . . . 267,000 Operating expenses Depreciation expense . . . . . . . . . . . $58,600 Other expenses . . . . . . . . . . . . . . . 67,000 Total operating expenses . . . . . . . . . . 125,600 141,400 Other gains (losses)
Gain on sale of equipment . . . . . . . 2,000 Income before taxes . . . . . . . . . . . . . . 143,400 Income taxes expense . . . . . . . . . . . . 43,890 Net income . . . . . . . . . . . . . . . . . . . . $ 99,510 Additional Information

a. A $30,000 note payable is retired at its carrying (book) value in exchange for cash.

b. The only changes affecting retained earnings are net income and cash dividends paid.

c. New equipment is acquired for $57,600 cash.

d. Received cash for the sale of equipment that had cost $48,600, yielding a $2,000 gain.

e. Prepaid Expenses and Wages Payable relate to Other Expenses on the income statement.

f. All purchases and sales of merchandise inventory are on credit.AppendixLO1