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Required information

Required information

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	$ 103,300	$ 51,000
Accounts receivable, net	75,500	58,000
Inventory	70,800	97,000
Prepaid expenses	5,100	6,800
Total current assets	254,700	212,800
Equipment	131,000	122,000
Accumulated depreciationEquipment	(30,500)	(12,500)
Total assets	$ 355,200	$ 322,300
Liabilities and Equity
Accounts payable	$ 32,000	$ 40,500
Wages payable	6,700	16,400
Income taxes payable	4,100	5,200
Total current liabilities	42,800	62,100
Notes payable (long term)	37,000	67,000
Total liabilities	79,800	129,100
Equity
Common stock, $5 par value	234,000	167,000
Retained earnings	41,400	26,200
Total liabilities and equity	$ 355,200	$ 322,300

IKIBAN INCORPORATED
Income Statement
For Year Ended June 30, 2021
Sales	$ 713,000
Cost of goods sold	418,000
Gross profit	295,000
Operating expenses (excluding depreciation)	74,000
Depreciation expense	65,600
	155,400
Other gains (losses)
Gain on sale of equipment	2,700
Income before taxes	158,100
Income taxes expense	44,590
Net income	$ 113,510

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 $64,600 cash.
4. Received cash for the sale of equipment that had cost $55,600, yielding a $2,700 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.

Note: Amounts to be deducted should be indicated with a minus sign.