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Exercise 16-11 Indirect: Preparing statement of cash flows LO P1, P2, P3, A1 (The following information applies to the questions displayed below.] The following financial statements and additional information are reported. 2016 IKIBAN INC. Comparative Balance Sheets June 30, 2017 and 2016 2017 Assets Cash $ 98,500 Accounts receivable, net 87,500 Inventory 78,800 Prepaid expenses 5,900 Total current assets 270,700 Equipment 139,000 Accum. depreciation-Equipment (34,500) Total assets $375,200 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) 45,000 Total liabilities 97,400 Equity Common stock, $5 par value 250,000 Retained earnings 27,800 Total liabilities and equity $375, 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 INC. Income Statement For Year Ended June 30, 2017 Sales Cost of goods sold Gross profit Operating expenses Depreciation expense $ 73,600 Other expenses 82,000 Total operating expenses $753,000 426,000 327,000 155,600 171,400 Other gains (losses) Gain on sale of equipment Income before taxes Income taxes expense 3,500 174,900 45,390 $129,510 Net income Additional Information a. A $30,000 note payable is retired at its $30,000 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 Other Expenses on the income statement. f. All purchases and sales of inventory are on credit. IKIBAN, INC. Statement of Cash Flows (Indirect Method) For Year Ended June 30, 2017 Cash flows from operating activities Adjustments to reconcile net income to net cash provided by operating activities Income statement items not affecting cash Changes in current operating assets and liabilities $ 0 Cash flows from investing activities 0 Cash flows from financing activities 0 $ 0 Net increase (decrease) in cash Cash balance at prior year-end Cash balance at current year-end $ 0