Exercise 12-19B (Algo) Direct: Preparing statement of cash flows LO P5 The following financial statements and additional information are reported. 2020 IKIBAN INCORPORATED Comparative Balance Sheets At June 30 2021 Assets Cash $ 80,900 Accounts receivable, net 81,500 Inventory 74,800 Prepaid expenses 5,500 Total current assets 242,700 Equipment 135,000 Accumulated depreciation-Equipment (32,500) Total assets $ 345,200 Liabilities and Equity Accounts payable $ 36,000 Wages payable 7,100 Income taxes payable 4,500 Total current liabilities 47,600 Notes payable (long term) 32,200 Total liabilities 79,800 Equity Common stock, $5 par value 242,000 Retained earnings 23,400 Total liabilities and equity $ 345,200 $ 55,000 62,000 103,000 7,600 227,600 126,000 (14,500) $ 339,100 $ 46,500 17,200 6,000 69,700 71,000 140,700 171,000 27,400 $ 339,100 IKIBAN INCORPORATED Income Statement For Year Ended June 30, 2021 Sales Cost of goods sold Gross profit Operating expenses (excluding depreciation) Depreciation expense $ 733,000 422,000 311,000 78,000 69,600 163,400 Other gains (losses) Gain on sale of equipment Income before taxes Income taxes expense Net income 3,100 166,500 44,990 $ 121,510 Additional Information a. A $38,800 note payable is retired at its $38,800 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 $68,600 cash. d. Received cash for the sale of equipment that had cost $59,600, yielding a $3,100 gain. e. Prepaid Expenses and Wages Payable relate to Operating Expenses on the income statement. f. All purchases and sales of inventory are on credit. IKIBAN, INCORPORATED Statement of Cash Flows (Direct Method) For Year Ended June 30, 2021 Cash flows from operating activities Cash received from customers $ 713,500 Cash paid for operating expenses (86,000) Cash paid for inventory (404,300) Cash paid for income taxes (46,490) $ 176,710 Net cash provided by operating activities Cash flows from investing activities Cash received from sale of equipment Cash paid for equipment 0 Net cash used in investing activities Cash flows from financing activities Cash paid to retire notes Cash paid for dividends Cash received from stock issuance 0 $ 176,710 Net cash used in financing activities Net increase (decrease) in cash Cash balance at prior year-end Cash balance at current year-end $ 176,710