Exercise 12-11 Indirect: Preparation of statement of cash flows LO P1, P2, P3, A1 The folowing information applies to the questions displayed below.J The following financial statements and additional information are reported IKIBAN INC Comparative Balance Sheets Junc 30, 2015 and 2014 2015 2014 Assets Cash $ 115,700 65,200 69,000 Accounts receivable, net Inventory 51,800 66,700 96,700 5,900 Prepaid expenses 4 800 Total current essets 256,200 219.60 Equipment Accum. depreciation-Equipment 20.600 28.800) 10,000 10.300) $348,000 319,300 Total assets Liabilities and Equity Accounts payable Wages payable Income taxes payable $26,500 32,100 900 3,000 16,800 4,300 Total current liabilites Notes payable (ong term 37,400 53,200 48,000 75,000 Total liabilities 85.400 128,200 Equity Common stock, 55 par valuc Retained eamings 238,000 24,600 183,000 8,100 $348,000 319,300 Total liabilities and equity IKIBAN INC. Income Statement For Year Ended June 30, 2015 $670,000 408,000 Sales Cost of goods sold 262,000 Gross profit Operating expenses Depreciation expense Other expenses $58,200 66,400 Total operating expenses 124,600 137,400 Other gains (losses) Gain on sale of equipment 2.400 Income before taxes 139,800 55,920 Income taxes expense Net income 83,880 Additional Information a. A $27,000 note payable is retired at its $27,000 carrying (book value in exchange for cash. b. The only changes affecting retained earnings are net income and cash dividends paic. C. New equipment is acquired for $59,400 cash. d. Recelved cash for the sale of equipment that had cost $48,800, ylelding a $2,400 gain. e. Prepaid Expenses and Wages Payable relate to Other Expenses on the income statement. f. All purchases and sales of inventory are on credit. Required (1) Prepare a statement of cash flows for the year ended June 30, 2015, using the indirect method (Amounts to be deducted should be indicated with a minus sign.) IKIBAN, INC. Statement of Cash Flows (Indirect Method) For Year Ended June 30, 2015 Cash flows from operating activities Net income Adjustments to reconcile net income to net cash provided by operating activities Income statement items not affecting cash Depreciation expense Gain on sale of plant assets Changes in current operating assets and liabilities Increase in accounts receivable Decrease in inventory Decrease in prepaid expenses Decrease in accounts payable Decrease in wages payable Decrease in income taxes payable Net cash used in operating activities Cash flows from investing activities Cash received from sale of equipment Cash paid for equipment Net cash used in investing activities Cash flows from financing activities Cash received from stock issuance Cash paid to retire notes Cash paid for dividends Net cash used in financing activities Net increase (decrease) in cash Cash balance at prior year-end Cash balance at current year-end
