The following financial statements and additional information are reported. (1) Prepare a statement of cash flows using
Question:
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, 2021.
(2) Compute the company’s cash flow on total assets ratio for fiscal year 2021.
Transcribed Image Text:
IKIBAN INC. IKIBAN INC. Income Statement Comparative Balance Sheets For Year Ended June 30, 2021 At June 30 2021 2020 Sales .. $678,000 Assets Cost of goods sold. Gross profit... 411,000 Cash $ 87,500 $ 44,000 267,000 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) $317,700 (9,000) $292,900 Income before taxes. 143,400 Total assets. Income taxes expense 43,890 Liabilities and Equity Net income. $ 99,510 Accounts payable. $ 25,000 $ 30,000 Wages payable. 6,000 15,000 Income taxes payable 3,400 3,800 Additional Information Total current liabilities 34,400 48,800 a. A $30,000 notes payable is retired at its $30,000 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. Notes payable (long term). 30,000 60,000 Total liabilities. 64,400 108,800 Equity Common stock, $5 par value. 220,000 160,000 Retained earnings 33,300 24,100 Total liabilities and equity. $317,700 $292,900 e. Prepaid Expenses and Wages Payable relate to Operating Expenses on the income statement. Activate W f. All purchases and sales of inventory are on credit. Check (1b) Cash paid for dividends, $90,310 (1d) Cash received from equin sale $10.000 Go to Settings
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In order to determine the amount of cash created by operating operations, the indirect technique for preparing the statement of cash flows entails adjusting net income with changes in balance sheet.
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