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 $ 87,580 65,000 63,800 4,400 220,700 124,800 (27,000 $317,700 $ 44,000 51,080 86,500 5,400 186,900 115,000 (9,808) $292,980 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 $ 25,000 6,080 3,400 34,400 30,000 64,400 $ 30,000 15,000 3,800 48,800 60,000 108,800 220,000 33,300 $317,700 160,000 24,100 $292,900 $678,000 411,000 267,200 IKIBAN INC. Income Statement For Year Ended June 30, 2019 Sales Cost of goods sold Gross profit Operating expenses Depreciation expense $58,600 Other expenses 67,080 Total operating expenses Other gains (losses) Gain on sale of equipment Income before taxes Income taxes expense Net income 125,600 141,400 2,800 143,400 43.898 $ 99,510 Additional Information 2. 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 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 sign.) IKIBAN, INC. Statement of Cash Flows (Indirect Method) For Year Ended June 30, 2019 Cash flows from operating activities Net Income $ 99 150 Adjustments to reconcile net income to net cash provided by operating activities Income statement items not affecting cash Depreciation expense 58,600 Gain on sale of plant assets 12,000) Changes in current operating assets and liabilities Increase in accounts receivats Decrease in inventory Decrease in prepaid expenses Decrease in accounts payable (14000) 22.700 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 1. All purchases and sales of inventory are on credit Exercise 12-11 Part 2 (2) Compute the company's cash flow on total assets ratio for its fiscal year 2019 Choosd Numerator Cash Flow on Total Asset Ratio Choose Denominator: Cash Flow on Total Assets Ratio Cash flow on total assets ratio 0 1
