BUS 106

Exercise 16-12 (Algo) Indirect: Preparing statement of cash flows LO P2, P3 [The following information applies to the questions displayed below.) The following financial statements and additional information are reported. 2020 IKIBAN INCORPORATED Comparative Balance Sheets At June 30 2021 Assets Cash $ 99, 100 Accounts receivable, net 86,000 Inventory 77,800 Prepaid expenses 5,800 Total current assets 268,700 Equipment 138,000 Accumulated depreciation-Equipment (34,000) Total assets $ 372,700 Liabilities and Equity Accounts payable $ 39,000 Wages payable 7,400 Income taxes payable 4,800 Total current liabilities 51,200 Notes payable (long term) 44,000 Total liabilities 95,200 Equity Common stock, $5 par value 248,000 Retained earnings 29,500 Total liabilities and equity $ 372,700 $ 58,000 65,000 107,500 8,200 238,700 129,000 (16,000) $ 351,700 $ 51,000 17,800 6,600 75,400 74,000 149,400 174,000 28,300 $ 351,700 IKIBAN INCORPORATED Income Statement For Year Ended June 30, 2021 Sales Cost of goods sold Gross profit $ 748,000 425,000 323.000 IKTBAN INCORPORATED Income Statement For Year Ended June 30, 2021 Sales Cost of goods sold Gross profit Operating expenses (excluding depreciation) Depreciation expense Other gains (losses) Gain on sale of equipment Income before taxes Income taxes expense Net income $ 748,000 425,000 323,000 81,000 72,600 169,400 3,400 172,800 45,290 $ 127,510 Additional Information 0. 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 $71,600 cash d. Received cash for the sale of equipment that had cost $62,600, ylelding a $3,400 gain. e. Prepaid Expenses and Wages Payable relate to Operating Expenses on the income statement f. All purchases and sales of inventory are on credit. (1) Prepare a statement of cash flows using the indirect method for the year ended June 30, 2021. (Amounts to be deducted should be indicated with a minus sign.) IKIBAN, INCORPORATED Statement of Cash Flows (indirect Method) For Year Ended June 30, 2021 Cash flows from operating activities Net income Adjustments to reconcile net income to not cash provided by operating activities Income statement items not affecting cash Depreciation expense Gain on sale of plant assets S 127,510 72 600 (3,400) es 3 Changes in current operating assets and liabilities Increase in accounts receivable Decrease in inventory Decrease in prepaid expenses Decrease in accounts payable Decrease in wagos payable Decrease in income taxes payable (21000) 29.700 2.400 (12.000) (10.400) (1 800) $ 183,610 Net cash provided by operating activities Cash flows from investing activities Cash received from sale of equipment Increase in accounts receivable Decrease in inventory Decrease in prepaid expenses Decrease in accounts payable Decrease in wages payable Decrease in income taxes payable (21000) 29.700 2.400 (12.000) (10.400) (1 800) 5 183,610 Net cash provided by operating activities Cash flows from investing activities Cash received from sale of equipment Cash paid for equipment 0 Net cash used in investing activities Cash flows from financing activities Cash received from stock issuance Cash paid to retire noles Cash paid for dividends 0 $ 183,610 Net cash used in investing activities Net increase (decrease) in cash Cash balance at prior year-end Cash balance at current year-end $ 183,610