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Exercise 12-11 Indirect: Preparing statement of cash flows LO P2, P3, A1

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[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, 2019 and 2018
	2019				2018
Assets
Cash	$	92,500			$	69,000
Accounts receivable, net		102,500				76,000
Inventory		88,800				124,000
Prepaid expenses		6,900				10,400
Total current assets		290,700				279,400
Equipment		149,000				140,000
Accum. depreciationEquipment		(39,500	)			(21,500	)
Total assets	$	400,200			$	397,900
Liabilities and Equity
Accounts payable	$	50,000			$	67,500
Wages payable		8,500				20,000
Income taxes payable		5,900				8,800
Total current liabilities		64,400				96,300
Notes payable (long term)		55,000				85,000
Total liabilities		119,400				181,300
Equity
Common stock, $5 par value		270,000				185,000
Retained earnings		10,800				31,600
Total liabilities and equity	$	400,200			$	397,900

IKIBAN INC. Income Statement For Year Ended June 30, 2019
Sales				$	803,000
Cost of goods sold					436,000
Gross profit					367,000
Operating expenses
Depreciation expense	$	83,600
Other expenses		92,000
Total operating expenses					175,600
					191,400
Other gains (losses)
Gain on sale of equipment					4,500
Income before taxes					195,900
Income taxes expense					46,390
Net income				$	149,510

Additional Information

1. A $30,000 note payable is retired at its $30,000 carrying (book) value in exchange for cash.
2. The only changes affecting retained earnings are net income and cash dividends paid.
3. New equipment is acquired for $82,600 cash.
4. Received cash for the sale of equipment that had cost $73,600, yielding a $4,500 gain.
5. Prepaid Expenses and Wages Payable relate to Other Expenses on the income statement.
6. All purchases and sales of inventory are on credit.

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
Net income
Adjustments to reconcile net income to net cash provided by operating activities
Income statement items not affecting cash
Depreciation expense
Changes in current operating assets and liabilities
		$0
Cash flows from investing activities
		0
Cash flows from financing activities
		0
Net increase (decrease) in cash		$0
Cash balance at prior year-end
Cash balance at current year-end		$0