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	$ 105,100	$ 48,000
Accounts receivable, net	71,000	55,000
Inventory	67,800	92,500
Prepaid expenses	4,800	6,200
Total current assets	248,700	201,700
Equipment	128,000	119,000
Accumulated depreciationEquipment	(29,000)	(11,000)
Total assets	$ 347,700	$ 309,700
Liabilities and Equity
Accounts payable	$ 29,000	$ 36,000
Wages payable	6,400	15,800
Income taxes payable	3,800	4,600
Total current liabilities	39,200	56,400
Notes payable (long term)	34,000	64,000
Total liabilities	73,200	120,400
Equity
Common stock, $5 par value	228,000	164,000
Retained earnings	46,500	25,300
Total liabilities and equity	$ 347,700	$ 309,700

IKIBAN INCORPORATED
Income Statement
For Year Ended June 30, 2021
Sales	$ 698,000
Cost of goods sold	415,000
Gross profit	283,000
Operating expenses (excluding depreciation)	71,000
Depreciation expense	62,600
	149,400
Other gains (losses)
Gain on sale of equipment	2,400
Income before taxes	151,800
Income taxes expense	44,290
Net income	$ 107,510

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 $61,600 cash.
4. Received cash for the sale of equipment that had cost $52,600, yielding a $2,400 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.)