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	$ 94,900	$ 65,000
Accounts receivable, net	96,500	72,000
Inventory	84,800	118,000
Prepaid expenses	6,500	9,600
Total current assets	282,700	264,600
Equipment	145,000	136,000
Accumulated depreciationEquipment	(37,500)	(19,500)
Total assets	$ 390,200	$ 381,100
Liabilities and Equity
Accounts payable	$ 46,000	$ 61,500
Wages payable	8,100	19,200
Income taxes payable	5,500	8,000
Total current liabilities	59,600	88,700
Notes payable (long term)	51,000	81,000
Total liabilities	110,600	169,700
Equity
Common stock, $5 par value	262,000	181,000
Retained earnings	17,600	30,400
Total liabilities and equity	$ 390,200	$ 381,100

IKIBAN INCORPORATED
Income Statement
For Year Ended June 30, 2021
Sales	$ 783,000
Cost of goods sold	432,000
Gross profit	351,000
Operating expenses (excluding depreciation)	88,000
Depreciation expense	79,600
	183,400
Other gains (losses)
Gain on sale of equipment	4,100
Income before taxes	187,500
Income taxes expense	45,990
Net income	$ 141,510

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 $78,600 cash.
4. Received cash for the sale of equipment that had cost $69,600, yielding a $4,100 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.)