Prepare a statement of cash flows using the indirect method for the year ended June 30, 2019.
Compute the companys cash flow on total assets ratio for its fiscal year 2019
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2018 IKIBAN INC. Comparative Balance Sheets June 30, 2019 and 2018 2019 Assets Cash $103,900 Accounts receivable, net 74,000 Inventory 69,800 Prepaid expenses 5,000 Total current assets 252,700 Equipment 130,000 Accum. depreciation-Equipment (30,000) Total assets $352, 700 Liabilities and Equity Accounts payable $ 31,000 Wages payable 6,600 Income taxes payable 4,000 Total current liabilities 41,600 Notes payable (long term) 36,000 Total liabilities 77,600 Equity Common stock, $5 par value 232,000 Retained earnings 43, 100 Total liabilities and equity $352,700 $ 50,000 57,000 95,500 6,600 209, 100 121,000 (12,000) $318, 100 $ 39,000 16, 200 5,000 60,200 66,000 126,200 166,000 25,900 $318,100 IKIBAN INC. Income Statement For Year Ended June 30, 2019 Sales Cost of goods sold Gross profit Operating expenses Depreciation expense $64,600 Other expenses 73,000 Total operating expenses $708,000 417,000 291,000 137,600 153,400 137,600 153,400 Total operating expenses Other gains (losses) Gain on sale of equipment Income before taxes Income taxes expense Net income 2,600 156,000 44,490 $111,510 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 $63,600 cash. d. Received cash for the sale of equipment that had cost $54,600, yielding a $2,600 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. Exercise 12-11 Part 1 Required: (1) Prepare a statement of cash flows using the indirect method for the year ended June 30, 2019. (Amounts to be deducted should be indicated with a minus sign.) IKIBAN, INC. Statement of Cash Flows (Indirect Method) For Year Ended June 30, 2019 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 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 A 0 2018 IKIBAN INC. Comparative Balance Sheets June 30, 2019 and 2018 2019 Assets Cash $103,900 Accounts receivable, net 74,000 Inventory 69,800 Prepaid expenses 5,000 Total current assets 252,700 Equipment 130,000 Accum. depreciation-Equipment (30,000) Total assets $352,700 Liabilities and Equity Accounts payable $ 31,000 Wages payable 6,600 Income taxes payable 4,000 Total current liabilities 41,600 Notes payable (long term) 36,000 Total liabilities 77,600 Equity Common stock, $5 par value 232,000 Retained earnings 43,100 Total liabilities and equity $352,700 $ 50,000 57,000 95,500 6,600 209, 100 121,000 (12,000) $318, 100 39,000 16,200 5,000 60,200 66,000 126,200 166,000 25,900 $318,100 IKIBAN INC. Income Statement For Year Ended June 30, 2019 Sales Cost of goods sold Gross profit Operating expenses Depreciation expense $64,600 Other expenses 73,000 Total operating expenses $708,000 417,000 291,000 137,600 153,400 137,600 153,400 Total operating expenses Other gains (losses) Gain on sale of equipment Income before taxes Income taxes expense Net income 2,600 156,000 44,490 $111,510 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 $63,600 cash. d. Received cash for the sale of equipment that had cost $54,600, yielding a $2,600 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. Exercise 12-11 Part 2 (2) Compute the company's cash flow on total assets ratio for its fiscal year 2019. Choose Numerator: Investing cash flows Cash Flow on Total Assets Ratio 1 Choose Denominator: = Cash Flow on Total Assets Ratio 1 Accounts receivable, Cash flow on total assets ratio / net
