Exercise 12-11 Indirect: Preparing statement of cash flows LO 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, 2019 and 2018 2019 2018 $186,300 68, eee 65,800 4,608 244,700 126,800 (28 800 $342,700 $ 46,000 53,000 89,589 5,800 194,300 117,eae (18.00) $301,300 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 $ 27,000 6,200 3,600 36,800 32, een 68,888 $ 33,00 15,480 4,200 52,600 62,eee 114,600 224,8ee 49,900 $342,700 162,00 24.ee 5301,300 $688,8 413,cae 275, eee IKIBAN INC. Income Statement For Year Ended June 30, 2019 Sales Cost of goods sold Gross profit Operating expenses Depreciation expense $68,680 Other expenses 69,00 Total operating expenses Other gains (losses) Gain on sale of equipment Income before taxes Income taxes expense Net income 129,600 145,480 2,290 147,600 44,090 $103,510 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 $59,600 cash. d. Received cash for the sale of equipment that had cost $50.600. yielding a $2.200 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 using the indirect method for the year ended June 30, 2019. (Amounts to be deducted should be Indicated with a minus slgn.) Answer is not complete. IKIBAN, INC. Statement of Cash Flows (Indirect Method) For Year Ended June 30, 2019 Cash flows from operating activities Net income 103,510 Adjustments to reconcile net income to net cash provided by operating activities Income statement items not affecting cash Depreciation expense 60.600 Gain on sale of plant assets (2.200) > 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 0000 15,000 X 23,700 1.200 6.000 X 9.200 X 800 x $ 217.610 Cash flows from investing activities Cash paid for equipment Cash received from sale of equipment X 50.600 X 10.200 OX 69,800 > Cash flows from financing activities Cash paid to retire notes Cash received from stock issuance Cash paid for dividends SIS 0 (30,000) 62.000 (78.310) $ Net increase (decrease) in cash Cash balance at prior year-end Cash balance at current year-end (46,310) 241.100 48.000 287,100 $ (2) Compute the company's cash flow on total assets ratio for its fiscal year 2019. Answer is complete but not entirely correct. Cash Flow on Total Assets Ratio Choose Cash Flow on Total Assets Denominator: Ratio Average total assets Cash flow on total assets ratio 342.700 X = 31.096 Choose Numerator Operating cash flows 108,300 X =
