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 Assets Cash Accounts receivable, net Inventory Prepaid expenses Total current assets Equipment Accum. depreciation-Equipment Total assets Liabilities and Equity Accounts payable Wages payable Income taxes payable Total current liabilities Notes payable (long term) Total liabilities Equity Common stock, $5 par value Retained earnings Total liabilities and equity 2017 2016 $ 87,500 65,000 $ 44,000 51,000 63,800 86,500 4,400 5,400 220,700 186,900 124,000 115,000 (27,000) (9,000) $317,700 $292,900 $ 30,000 $ 25,000 6,000 3,400 34,400 15,000 3,800 48,800 30,000 60,000 64,400 108,800 220,000 160,000 33,300 24,100 $317,700 $292,900 IKIBAN INC. Income Statement For Year Ended June 30, 2017 Sales Cost of goods sold $678,000 411,000 IKIBAN INC. Income Statement For Year Ended June 30, 2017 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 Income before taxes 2,000 143,400 Income taxes expense Net income 43,890 $ 99,510 Additional Information a. A $30,000 note 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. e. Prepaid Expenses and Wages Payable relate to Other Expenses on the income statement. f. All purchases and sales of inventory are on credit. (2) Compute the company's cash flow on total assets ratio for its fiscal year 2017. Cash Flow on Total Assets Ratio Cash Flow on Total Assets Ratio Choose Numerator: 1 Choose Denominator: = Cash flow on total assets ratio = 0 Using the direct method, prepare the statement of cash flows for the year ended June 30, 2017. (Amounts to be deducted should be indicated with a minus sign.) IKIBAN, INC. Statement of Cash Flows (Direct Method) For Year Ended June 30, 2017 Cash flows from operating activities $ 0 Cash flows from investing activities 0 Cash flows from financing activities 0 Net increase (decrease) in cash. $ 0 Cash flows from financing activities Net increase (decrease) in cash Cash balance at prior year-end Cash balance at current year-end 69 0 0 0 $ 0