Exercise 12-12 (Algo) Indirect: Preparing statement of cash flows LO P2, P3, A1

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[The following information applies to the questions displayed below.] The following financial statements and additional information are reported.

IKIBAN INCORPORATED
Comparative Balance Sheets
At June 30	2021	2020
Assets
Cash	$ 93,100	$ 68,000
Accounts receivable, net	101,000	75,000
Inventory	87,800	122,500
Prepaid expenses	6,800	10,200
Total current assets	288,700	275,700
Equipment	148,000	139,000
Accumulated depreciationEquipment	(39,000)	(21,000)
Total assets	$ 397,700	$ 393,700
Liabilities and Equity
Accounts payable	$ 49,000	$ 66,000
Wages payable	8,400	19,800
Income taxes payable	5,800	8,600
Total current liabilities	63,200	94,400
Notes payable (long term)	54,000	84,000
Total liabilities	117,200	178,400
Equity
Common stock, $5 par value	268,000	184,000
Retained earnings	12,500	31,300
Total liabilities and equity	$ 397,700	$ 393,700

IKIBAN INCORPORATED
Income Statement
For Year Ended June 30, 2021
Sales	$ 798,000
Cost of goods sold	435,000
Gross profit	363,000
Operating expenses (excluding depreciation)	91,000
Depreciation expense	82,600
	189,400
Other gains (losses)
Gain on sale of equipment	4,400
Income before taxes	193,800
Income taxes expense	46,290
Net income	$ 147,510

Additional Information

A $30,000 notes 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 $81,600 cash.

Received cash for the sale of equipment that had cost $72,600, yielding a $4,400 gain.

Prepaid Expenses and Wages Payable relate to Operating Expenses on the income statement.

All purchases and sales of inventory are on credit.

Use Indirect Method