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Exercise $12-12($Algo$)$ Indirect: Preparing statement of cash flows LO P$2,$ P$3,$ A$1$

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The following financial statements and additional information are reported.

IKIBAN INCORPORATED

Comparative Balance Sheets

At June $3020212020$

Assets

Cash $ $99,100$ $ $58,000$

Accounts receivable, net $86,00065,000$

Inventory $77,800107,500$

Prepaid expenses $5,8008,200$

Total current assets $268,700238,700$

Equipment $138,000129,000$

Accumulated depreciation$$Equipment $(34,000)(16,000)$

Total assets $ $372,700$ $ $351,700$

Liabilities and Equity

Accounts payable $ $39,000$ $ $51,000$

Wages payable $7,40017,800$

Income taxes payable $4,8006,600$

Total current liabilities $51,20075,400$

Notes payable $($long term$)44,00074,000$

Total liabilities $95,200149,400$

Equity

Common stock, $$5$ par value $248,000174,000$

Retained earnings $29,50028,300$

Total liabilities and equity $ $372,700$ $ $351,700$

IKIBAN INCORPORATED

Income Statement

For Year Ended June $30,2021$

Sales $ $748,000$

Cost of goods sold $425,000$

Gross profit $323,000$

Operating expenses $($excluding depreciation$)81,000$

Depreciation expense $72,600$

$169,400$

Other gains $($losses$)$

Gain on sale of equipment $3,400$

Income before taxes $172,800$

Income taxes expense $45,290$

Net income $ $127,510$

Additional Information

A $$30,000$ notes payable is retired at its $$30,000$ carrying $($book$)$ value in exchange for cash.

The only changes affecting retained earnings are net income and cash dividends paid.

New equipment is acquired for $$71,600$ cash.

Received cash for the sale of equipment that had cost $$62,600,$ yielding a $$3,400$ gain.

Prepaid Expenses and Wages Payable relate to Operating Expenses on the income statement.

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.

Use the following information for the Problems below. $($Algo$)$

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Forten Company's current year income statement, comparative balance sheets, and additional information follow. For the year,

$(1)$ all sales are credit sales,

$(2)$ all credits to Accounts Receivable reflect cash receipts from customers,

$(3)$ all purchases of inventory are on credit, and

$(4)$ all debits to Accounts Payable reflect cash payments for inventory.

FORTEN COMPANY

Income Statement

For Current Year Ended December $31$

Sales $ $682,500$

Cost of goods sold $305,000$

Gross profit $377,500$

Operating expenses $($excluding depreciation$)$ $ $152,400$

Depreciation expense $40,750193,150$

Other gains $($losses$)$

Loss on sale of equipment $(25,125)$

Income before taxes $159,225$

Income taxes expense $52,250$

Net income $ $106,975$

FORTEN COMPANY

Comparative Balance Sheets

December $31$

Current Year Prior Year

Assets

Cash $ $79,900$ $ $93,500$

Accounts receivable $95,97070,625$

Inventory $305,656271,800$

Prepaid expenses $1,4102,295$

Total current assets $482,936438,220$

Equipment $137,500128,000$

Accumulated depreciation$$Equipment $(46,625)(56,000)$

Total assets $ $573,811$ $ $510,220$

Liabilities and Equity

Accounts payable $ $73,141$ $ $144,675$

Long$-$term notes payable $71,00078,750$

Total liabilities $144,141223,425$

Equity

Common stock, $$5$ par value $192,750170,250$

Paid$-$in capital in excess of par, common stock $67,5000$

Retained earnings $169,420116,545$

Total liabilities and equity $ $573,811$ $ $510,220$

Additional Information on Current Year Transactions

The loss on the cash sale of equipment was $$25,125($details in b$).$

Sold equipment costing $$106,875,$ with accumulated depreciation of $$50,125,$ for $$31,625$ cash.

Purchased equipment costing $$116,375$ by paying $$70,000$ cash and signing a long$-$term notes payable for the balance.

Paid $$54,125$ cash to reduce the long$-$term notes payable.

Issued $4,500$ shares of common stock for $$20$ cash per share.

Declared and paid cash dividends of $$54,100.$

Problem $12-3$A $($Algo$)$ Indirect: Statement of cash flows LO A$1,$ P$2,$ P$3$

Required:

$1.$ Prepare a complete statement of cash flows using the indirect method for the current year.

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