Exercise 12-12 (Algo) 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 INCORPORATED Comparative Balance Sheets 2021 2020 $ 99,100 86,000 $ 58,000 77,800 65,000 107,500 5,800 8,200 268,700 238,700 At June 30 Assets Cash Accounts receivable, net Prepaid expenses Inventory Total current assets Equipment Accumulated 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 138,000 (34,000) $ 372,700 $ 39,000 7,400 129,000 (16,000) $ 351,700 $ 51,000 17,800 6,600 75,400 4,800 51,200 44,000 74,000 95,200 149,400 248,000 174,000 29,500 $ 372,700 28,300 $ 351,700 Sales Cost of goods sold Gross profit IKIBAN INCORPORATED Income Statement For Year Ended June 30, 2021 Operating expenses (excluding depreciation) Depreciation expense Other gains (losses) Gain on sale of equipment Income before taxes Income taxes expense Net income Additional Information $ 748,000 425,000 323,000 81,000 72,600 169,400 3,400 172,800 45,290 $ 127,510 a. A $30,000 notes 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 $71,600 cash. d. Received cash for the sale of equipment that had cost $62,600, yielding a $3,400 gain. e. Prepaid Expenses and Wages Payable relate to Operating Expenses on the income statement. f. All purchases and sales of inventory are on credit. Exercise 12-12 (Algo) Part 1 Required information Required: (1) Prepare a statement of cash flows using the indirect method for the year ended June 30, 2021. (Amounts to be deducted should be indicated with a minus sign.) Cash flows from operating activities Net income IKIBAN, INCORPORATED Statement of Cash Flows (Indirect Method) For Year Ended June 30, 2021 Adjustments to reconcile net income to net cash provided by operating activities Income statement items not affecting cash Cash paid for income taxes Depreciation expense Gain on sale of plant assets Changes in current operating assets and liabilities $ 131,510 74,600 (3,600) Required information Cash flows from investing activities Cash flows from financing activities Net increase (decrease) in cash Cash balance at prior year-end Cash balance at current year-end $ 202,510 0 0 $ 202,510 $ 202,510