Required information Exercise 12-11 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. IKIBAN INC. Comparative Balance Sheets June 30, 2017 and 2016 2017 2016 Assets Cash $ 106,300 $ 46,000 Accounts receivable, net 68,000 53,000 Inventory 65,800 89,500 Prepaid expenses 4,600 5,800 Total current assets 244,700 194,300 Equipment 126,000 117,000 Accum. depreciationEquipment (28,000 ) (10,000 ) Total assets $ 342,700 $ 301,300 Liabilities and Equity Accounts payable $ 27,000 $ 33,000 Wages payable 6,200 15,400 Income taxes payable 3,600 4,200 Total current liabilities 36,800 52,600 Notes payable (long term) 32,000 62,000 Total liabilities 68,800 114,600 Equity Common stock, $5 par value 224,000 162,000 Retained earnings 49,900 24,700 Total liabilities and equity $ 342,700 $ 301,300 IKIBAN INC. Income Statement For Year Ended June 30, 2017 Sales $ 688,000 Cost of goods sold 413,000 Gross profit 275,000 Operating expenses Depreciation expense $ 60,600 Other expenses 69,000 Total operating expenses 129,600 145,400 Other gains (losses) Gain on sale of equipment 2,200 Income before taxes 147,600 Income taxes expense 44,090 Net income $ 103,510 Additional Information A $30,000 note 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 $59,600 cash. Received cash for the sale of equipment that had cost $50,600, yielding a $2,200 gain. Prepaid Expenses and Wages Payable relate to Other Expenses on the income statement. All purchases and sales of inventory are on credit.