Exercise 12-17B Direct: Preparing statement of cash flows LO P5 The following financial statements and additional information are reported. 2018 IKIBAN INC. Comparative Balance Sheets June 30, 2019 and 2018 2019 Assets Cash $ 77,300 Accounts receivable, net 90,500 Inventory 80,800 Prepaid expenses 6,100 Total current assets 254,700 Equipment 141,000 Accum. depreciation-Equipment (35,500) Total assets $360,200 Liabilities and Equity Accounts payable $ 42,000 Wages payable 7,700 Income taxes payable 5,100 Total current liabilities 54,800 Notes payable (long term) 33,400 Total liabilities 88,200 Equity Common stock, $5 par value 254,000 Retained earnings 18,000 Total liabilities and equity $360,200 $ 61,000 68,000 112,000 8,800 249,800 132,000 (17,500) $364,300 $ 55,500 18,400 7,200 81,100 77,000 158, 100 177,000 29, 200 $364,300 IKIBAN INC. Income Statement For Year Ended June 30, 2019 Sales Cost of goods sold Gross profit Operating expenses Depreciation expense $ 75,600 Other expenses 84,000 Total operating expenses $763,000 428,000 335,000 159,600 175,400 Other gains (losses) Gain on sale of equipment Income before taxes Income taxes expense Net income 3,700 179,100 45,590 $ 133,510 Additional Information a. A $43,600 note payable is retired at its $43,600 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 $74,600 cash. d. Received cash for the sale of equipment that had cost $65,600, yielding a $3,700 gain. e. Prepaid Expenses and Wages Payable relate to Other Expenses on the income statement. f. All purchases and sales of inventory are on credit. Using the direct method, prepare the statement of cash flows for the year ended June 30, 2019. (Amounts to be deducted should be indicated with a minus sign.) IKIBAN, INC. Statement of Cash Flows (Direct Method) For Year Ended June 30, 2019 Cash flows from operating activities Cash received from customers $ 740,500 Cash paid for inventory 419,300 Cash paid for operating expenses 92,000 Cash paid for income taxes 47,690 $ 1,299,490 Net cash provided by operating activities Cash flows from investing activities Cash received from sale of equipment Cash paid for equipment 11,700 (74,600) (62,900) Net cash used in investing activities Cash flows from financing activities Cash received from stock issuance Cash paid to retire notes Cash paid for dividends 77,000 (43,600) 33,400 $ 1,269,990 Net cash used in financing activities Net increase (decrease) in cash Cash balance at prior year-end Cash balance at current year-end $ 1,269,990