Exercise 12-11 Indirect: Preparing statement of cash flows LO P1, P2, P3, A1 [The following information applies to the questions displayed below.] The following financial statements and additional information are reported. IKIBAN INC. Comparative Balance Sheets June 30, 2017 and 2016 2017 2016 Assets Cash $ 99,700 $ 57,000 Accounts receivable, net 84,500 64,000 Inventory 76,800 106,000 Prepaid expenses 5,700 8,000 Total current assets 266,700 235,000 Equipment 137,000 128,000 Accum. depreciationEquipment (33,500 ) (15,500 ) Total assets $ 370,200 $ 347,500 Liabilities and Equity Accounts payable $ 38,000 $ 49,500 Wages payable 7,300 17,600 Income taxes payable 4,700 6,400 Total current liabilities 50,000 73,500 Notes payable (long term) 43,000 73,000 Total liabilities 93,000 146,500 Equity Common stock, $5 par value 246,000 173,000 Retained earnings 31,200 28,000 Total liabilities and equity $ 370,200 $ 347,500 IKIBAN INC. Income Statement For Year Ended June 30, 2017 Sales $ 743,000 Cost of goods sold 424,000 Gross profit 319,000 Operating expenses Depreciation expense $ 71,600 Other expenses 80,000 Total operating expenses 151,600 167,400 Other gains (losses) Gain on sale of equipment 3,300 Income before taxes 170,700 Income taxes expense 45,190 Net income $ 125,510 Additional Information A $30,000 note payable is retired at its $30,000 carrying (book) value in exchange for cash. The only changes affecting retained earnings are net income and cash dividends paid. New equipment is acquired for $70,600 cash. Received cash for the sale of equipment that had cost $61,600, yielding a $3,300 gain. Prepaid Expenses and Wages Payable relate to Other Expenses on the income statement. All purchases and sales of inventory are on credit.