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	$ 103,900	$ 50,000
Accounts receivable, net	74,000	57,000
Inventory	69,800	95,500
Prepaid expenses	5,000	6,600
Total current assets	252,700	209,100
Equipment	130,000	121,000
Accumulated depreciationEquipment	(30,000)	(12,000)
Total assets	$ 352,700	$ 318,100
Liabilities and Equity
Accounts payable	$ 31,000	$ 39,000
Wages payable	6,600	16,200
Income taxes payable	4,000	5,000
Total current liabilities	41,600	60,200
Notes payable (long term)	36,000	66,000
Total liabilities	77,600	126,200
Equity
Common stock, $5 par value	232,000	166,000
Retained earnings	43,100	25,900
Total liabilities and equity	$ 352,700	$ 318,100

IKIBAN INCORPORATED
Income Statement
For Year Ended June 30, 2021
Sales	$ 708,000
Cost of goods sold	417,000
Gross profit	291,000
Operating expenses (excluding depreciation)	73,000
Depreciation expense	64,600
	153,400
Other gains (losses)
Gain on sale of equipment	2,600
Income before taxes	156,000
Income taxes expense	44,490
Net income	$ 111,510

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 $63,600 cash.
4. Received cash for the sale of equipment that had cost $54,600, yielding a $2,600 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.

Note: 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

Skip to question

[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	$ 103,900	$ 50,000
Accounts receivable, net	74,000	57,000
Inventory	69,800	95,500
Prepaid expenses	5,000	6,600
Total current assets	252,700	209,100
Equipment	130,000	121,000
Accumulated depreciationEquipment	(30,000)	(12,000)
Total assets	$ 352,700	$ 318,100
Liabilities and Equity
Accounts payable	$ 31,000	$ 39,000
Wages payable	6,600	16,200
Income taxes payable	4,000	5,000
Total current liabilities	41,600	60,200
Notes payable (long term)	36,000	66,000
Total liabilities	77,600	126,200
Equity
Common stock, $5 par value	232,000	166,000
Retained earnings	43,100	25,900
Total liabilities and equity	$ 352,700	$ 318,100

IKIBAN INCORPORATED
Income Statement
For Year Ended June 30, 2021
Sales	$ 708,000
Cost of goods sold	417,000
Gross profit	291,000
Operating expenses (excluding depreciation)	73,000
Depreciation expense	64,600
	153,400
Other gains (losses)
Gain on sale of equipment	2,600
Income before taxes	156,000
Income taxes expense	44,490
Net income	$ 111,510

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 $63,600 cash.
4. Received cash for the sale of equipment that had cost $54,600, yielding a $2,600 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 2

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