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 INC. At June 30 Assets Cash Accounts receivable, net Inventory Prepaid expenses Comparative Balance Sheets 2020 2019 $ 97,900 $ 60,000 89,000 79,800 67,000 110,500 6,000 8,600 272,700 246,100 140,000 131,000 (35,000) (17,000) $377,700 $360,100 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 $ 41,000 $ 54,000 7,600 18,200 5,000 7,000 53,600 79,200 46,000 76,000 99,600 155,200 252,000 176,000 26,100 $377,700 28,900 $360,100 IKIBAN INC. Income Statement For Year Ended June 30, 2020 Sales $ 758,000 Cost of goods sold 427,000 Gross profit 331,000 Operating expenses (excluding 83,000 depreciation) Depreciation expense 74,600 173,400 Other gains (losses) Gain on sale of equipment 3,600 Sales IKIBAN INC. Income Statement For Year Ended June 30, 2020 Cost of goods sold Gross profit Operating expenses (excluding depreciation) Depreciation expense Other gains (losses) Gain on sale of equipment Income before taxes Income taxes expense Net income $ 758,000 427,000 331,000 83,000 74,600 173,400 3,600 177,000 45,490 $ 131,510 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 $73,600 cash. d. Received cash for the sale of equipment that had cost $64,600, yielding a $3,600 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: (1) Prepare a statement of cash flows using the indirect method for the year ended June 30, 2020. (Amounts to be deducted she 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 Adjustments to reconcile net income to net cash provided by operating activities Income statement items not affecting cash Depreciation expense Gain on sale of plant assets Increase in accounts receivable Changes in current operating assets and liabilities Decrease in inventory Decrease in prepaid expenses Decrease in accounts payable Decrease in wages payable Decrease in income taxes payable Cash flows from investing activities Cash paid for equipment Cash received from sale of equipment Cash flows from financing activities Cash received from stock issuance Cash paid for dividends $ 0 0 Cash flows from financing activities Cash received from stock issuance Cash paid for dividends Net increase (decrease) in cash Cash balance at prior year-end Cash balance at current year-end 0 $ 0 0 0