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	$ 103,300	$ 51,000
Accounts receivable, net	75,500	58,000
Inventory	70,800	97,000
Prepaid expenses	5,100	6,800
Total current assets	254,700	212,800
Equipment	131,000	122,000
Accumulated depreciationEquipment	(30,500)	(12,500)
Total assets	$ 355,200	$ 322,300
Liabilities and Equity
Accounts payable	$ 32,000	$ 40,500
Wages payable	6,700	16,400
Income taxes payable	4,100	5,200
Total current liabilities	42,800	62,100
Notes payable (long term)	37,000	67,000
Total liabilities	79,800	129,100
Equity
Common stock, $5 par value	234,000	167,000
Retained earnings	41,400	26,200
Total liabilities and equity	$ 355,200	$ 322,300

IKIBAN INCORPORATED
Income Statement
For Year Ended June 30, 2021
Sales	$ 713,000
Cost of goods sold	418,000
Gross profit	295,000
Operating expenses (excluding depreciation)	74,000
Depreciation expense	65,600
	155,400
Other gains (losses)
Gain on sale of equipment	2,700
Income before taxes	158,100
Income taxes expense	44,590
Net income	$ 113,510

Additional Information

1. A $30,000 notes payable is retired at its $30,000 carrying (book) value in exchange for cash.
2. The only changes affecting retained earnings are net income and cash dividends paid.
3. New equipment is acquired for $64,600 cash.
4. Received cash for the sale of equipment that had cost $55,600, yielding a $2,700 gain.
5. Prepaid Expenses and Wages Payable relate to Operating Expenses on the income statement.
6. 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, 2021. (Amounts to be deducted should be indicated with a minus sign.)

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	$ 103,300	$ 51,000
Accounts receivable, net	75,500	58,000
Inventory	70,800	97,000
Prepaid expenses	5,100	6,800
Total current assets	254,700	212,800
Equipment	131,000	122,000
Accumulated depreciationEquipment	(30,500)	(12,500)
Total assets	$ 355,200	$ 322,300
Liabilities and Equity
Accounts payable	$ 32,000	$ 40,500
Wages payable	6,700	16,400
Income taxes payable	4,100	5,200
Total current liabilities	42,800	62,100
Notes payable (long term)	37,000	67,000
Total liabilities	79,800	129,100
Equity
Common stock, $5 par value	234,000	167,000
Retained earnings	41,400	26,200
Total liabilities and equity	$ 355,200	$ 322,300

IKIBAN INCORPORATED
Income Statement
For Year Ended June 30, 2021
Sales	$ 713,000
Cost of goods sold	418,000
Gross profit	295,000
Operating expenses (excluding depreciation)	74,000
Depreciation expense	65,600
	155,400
Other gains (losses)
Gain on sale of equipment	2,700
Income before taxes	158,100
Income taxes expense	44,590
Net income	$ 113,510

Additional Information

1. A $30,000 notes payable is retired at its $30,000 carrying (book) value in exchange for cash.
2. The only changes affecting retained earnings are net income and cash dividends paid.
3. New equipment is acquired for $64,600 cash.
4. Received cash for the sale of equipment that had cost $55,600, yielding a $2,700 gain.
5. Prepaid Expenses and Wages Payable relate to Operating Expenses on the income statement.
6. 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, 2021. (Amounts to be deducted should be indicated with a minus sign.)

IKIBAN, INCORPORATED
Statement of Cash Flows (Indirect Method)
For Year Ended June 30, 2021
Cash flows from operating activities
Net income	$113,510
Adjustments to reconcile net income to net cash provided by operating activities
Income statement items not affecting cash
Depreciation expense	65,600
	0
Gain on sale of plant assets	(2,700)
Changes in current operating assets and liabilities
Increase in accounts receivable	(17,500)
Decrease in inventory	26,200
Decrease in prepaid expenses	1,700
Decrease in accounts payable	(8,500)
Decrease in wages payable	(9,700)
	0
Decrease in income taxes payable	(1,100)
Net cash provided by operating activities		$167,510
Cash flows from investing activities
Cash received from sale of equipment
Net cash used in investing activities		0
Cash flows from financing activities
Cash paid to retire notes
Cash received from stock issuance
Cash paid for dividends
Net cash used in financing activities		0
Net increase (decrease) in cash		$167,510
Cash balance at prior year-end
Cash balance at current year-end		$167,510

(2) Compute the companys cash flow on total assets ratio for its fiscal year 2021.

Cash Flow on Total Assets Ratio
Choose Numerator:	/	Choose Denominator:	=	Cash Flow on Total Assets Ratio
Operating cash flows	/	Average total assets	=	Cash flow on total assets ratio
	/		=	0