Exercise 16-19B (Algo) Direct: Preparing statement of cash flows LO P5 The following financial statements and additional information are reported. At June 30 Assets Cash Accounts receivable, net Prepaid expenses Inventory Total current assets Equipment Accumulated depreciation-Equipment Total assets Liabilities and Equity Accounts payable Wages payable Income taxes payable Total current liabilities Notes payable (long term) Total liabilities Equity Common stock, $5 par value IKIBAN INCORPORATED Comparative Balance Sheets 2021 2020 $ 77,900 89,000 $ 60,000 79,800 67,000 110,500 6,000 8,600 252,700 246,100 5,000 140,000 (35,000) $ 357,700 $ 41,000 7,600 131,000 (17,000) $ 360,100 $ 54,000 18,200 7,000 53,600 79,200 33,200 76,000 86,800 155,200 252,000 Retained earnings 18,900 176,000 28,900 Total liabilities and equity $ 357,700 $ 360,100 IKIBAN INCORPORATED Income Statement For Year Ended June 30, 2021 Sales $ 758,000 Cost of goods sold Gross profit Operating expenses (excluding depreciation) Depreciation expense Other gains (losses) Gain on sale of equipment Income before taxes Income taxes expense Net income 427,000 331,000 83,000 74,600 173,400 3,600 177.000 45,490 $ 131,510 Additional Information a. A $42,800 note payable is retired at its $42,800 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 $73,600 cash. d. Received cash for the sale of equipment that had cost $64,600, yielding a $3,600 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 received from customers $ 736,000 Cash paid for inventory (409,300) Cash paid for operating expenses (91,000) Cash paid for income taxes (47.490) Net cash provided by operating activities $ 188,210 Cash flows from investing activities Cash paid for equipment (73.600) Cash received from sale of equipment Net cash used in investing activities (73,600) Cash flows from financing activities Cash paid to retire notes (42.800) Cash received from stock issuance Cash paid for dividends Net cash used in financing activities (42.800) Net increase (decrease) in cash $ 71.810 Cash balance at prior year-end Cash balance at current year-end 60,000 $ 131,010