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 Accounts receivable, net Inventory Prepaid expenses Total current assets Equipment Accum. depreciation-Equipment Total assets $103,300 51,000 58,000 97,000 6,800 212,800 122,000 12,500 $355,200 $322,300 75,500 70,800 5,100 254,700 131,000 30,500 Liabilities and Equity Accounts payable Wages payable Income taxes payable Total current liabilities Notes payable (long term) Total liabilities Equity Common stock, $5 par value Retained earnings Total liabilities and equity 32,000 40,500 16,400 5,200 62,100 37,000 67,000 129,100 6,700 4,100 42,800 79,800 167,000 41,40026,200 $355,200 322, 300 234,000 IKBAN INC Income Statement For Year Ended June 30, 2017 $713,000 Sales IKIBAN INC. Income Statement For Year Ended June 30, 2017 Sales Cost of goods sold Gross profit Operating expenses $713,000 418,000 295,000 $65,600 74,000 Depreciation expense Other expenses Total operating expenses 139,600 155, 400 Other gains (losses) Gain on sale of equipment Income before taxes Income taxes expense Net income 2,700 158,100 44,590 $113,510 Additional Information a. A $30,000 note payable is retired at its $30,000 carrying (book) value in exchange for caslh b. The only changes affecting retained earnings are net income and cash dividends paid c. New equipment is acquired for $64,600 cash d. Received cash for the sale of equipment that had cost $55,600, yielding a $2,700 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 for the year ended June 30, 2017, using the indirect method. (Amounts to be deducted should be indicated with a minus sign.) IKIBAN, INC Statement of Cash Flows (Indirect Method) For Year Ended June 30, 2017 Cash flows from operating activities $ 113,510 Net income Adjustments to reconcile net income to net cash provided by operating activities Income statement items not affecting cash Depreciation expense Gain on sale of plant assets Increase in accounts payable Changes in current operating assets and liabilities Decrease in inventory Decrease in prepaid expenses Decrease in accounts payable Decrease in wages payable Decrease in income taxes payable $113,510 Net cash provided by operating activities Cash flows from investing activities Cash paid for equipment Cash received from sale of equipment Net cash used in investing activities Cash flows from financing activities Decrease in prepaid expenses Decrease in accounts payable Decrease in wages payable Decrease in income taxes payable Net cash provided by operating activities Cash flows from investing activities 113,510 Cash paid for equipment Cash received from sale of equipment Net cash used in investing activities Cash flows from financing activities $113,510 Net increase (decrease) in cash Cash balance at prior year-end Cash balance at current year-end 113,510