Exercise 12-19B (Algo) Direct: Preparing statement of cash flows LO P5

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 $ 78,500 Accounts receivable, net 87,500 Inventory 78,800 Prepaid expenses 5,900 Total current assets 250, 700 Equipment 139,000 Accumulated depreciation-Equipment (34,500) Total assets $ 355,200 Liabilities and Equity Accounts payable $ 40,000 Wages payable 7,500 Income taxes payable 4,900 Total current liabilities 52,400 Notes payable (long term) 33,000 Total liabilities 85,400 Equity Common stock, $5 par value 250,000 Retained earnings 19,800 Total liabilities and equity $ 355,200 $ 59,000 66,000 109,000 8,400 242,400 130,000 (16,500) $ 355, 900 $ 52,500 18,000 6,800 77,300 75,000 152,300 175,000 28,600 $ 355, 900 IKIBAN INCORPORATED Income Statement For Year Ended June 30, 2021 Sales Cost of goods sold Gross profit Operating expenses (excluding depreciation) Depreciation expense $ 753,000 426,000 327,000 82,000 73,600 171,400 Other gains (losses) Gain on sale of equipment Income before taxes Income taxes expense Net income 3,500 174,900 45,390 $ 129,510 a. A $42,000 note payable is retired at its $42,000 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 $72,600 cash. d. Received cash for the sale of equipment that had cost $63,600, yielding a $3,500 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. Using the direct method, prepare the statement of cash flows for the year ended June 30, 2021. (Amounts to be deducted should be indicated with a minus sign.) IKIBAN, INCORPORATED Statement of Cash Flows (Direct Method) For Year Ended June 30, 2021 Cash flows from operating activities Cash flows from investing activities Cash flows from financing activities Net increase (decrease) in cash Cash balance at prior year-end Cash balance at current year-end