Required information Exercise 12-11 Indirect: Preparing statement of cash flows LO P2, P3, A1 [The following information applies to the questions displayed below. The following financial statements and additional information are reported. 2018 IKIBAN INC. Comparative Balance Sheets June 30, 2019 and 2018 2019 Assets Cash $ 98,500 Accounts receivable, net 87,500 Inventory 78,800 Prepaid expenses 5,900 Total current assets 270,700 Equipment 139,000 Accum. depreciation-Equipment (34,500) Total assets $375,200 Liabilities and Equity Accounts payable $ 40,000 Wages payable 7,500 Income taxes payable 4,900 Total current liabilities 52,400 Notes payable long term) 45,000 Total liabilities 97,400 Equity Common stock, 85 par value 250,000 Retained earnings 27,800 Total liabilities and equity $375,200 $ 59,000 66,000 109,000 8,400 242,400 130,000 (16,500) $355, 900 $ 52,500 18,000 6,800 77,300 75,000 152, 300 175,000 28, 600 $355,900 IKIBAN INC. Income Statement For Year Ended June 30, 2019 Sales Cost of goods sold Gross profit Operating expenses Depreciation expense $73,600 Other expenses 82,000 Total operating expenses $ 753,000 426,000 327,000 155,600 171,400 Other gains (losses) Gain on sale of equipment Income before taxes Income taxes expense Net income 3,500 174,900 45, 390 $129,510 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 incore and cash dividends paid. c. New equipment is acquired for $72,600 cash. d. Received cash for the sale of equipment that had cost $63,600, yielding a $3,500 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. Required information IKIBAN, INC. Statement of Cash Flows (Indirect Method) For Year Ended June 30, 2019 Cash flows from operating activities Net income $ 129,510 Adjustments to reconcile net income to net cash provided by operating activities Income statement items not affecting cash Depreciation expense 73,600 Gain on sale of plant assets 3,500 > Changes in current operating assets and liabilities Increase in accounts receivable Decrease in inventory Decrease in prepaid expenses Decrease in accounts payable Decrease in wages payable Decrease in income taxes payable (21,500) 30,200 30,200 (12,500) (10,500) (1,900) $ 220,610 Net cash provided by operating activities Cash flows from investing activities Cash paid for equipment 72,600 72,600 Cash flows from financing activities Cash paid to retire notes Cash received from stock issuance (30,000) 60.000 Required information 3,500 Gain on sale of plant assets Changes in current operating assets and liabilities Increase in accounts receivable Decrease in inventory Decrease in prepaid expenses Decrease in accounts payable Decrease in wages payable Decrease in income taxes payable (21,500) 30,200 30,200% (12,500) (10,500) (1,900) $ 220,610 Net cash provided by operating activities Cash flows from investing activities Cash paid for equipment 72,600 % 72,600 Cash flows from financing activities Cash paid to retire notes Cash received from stock issuance Cash paid for dividends (30,000) 60,000 (130,310) (100,310) 192,900 S Net cash used in financing activities Net increase (decrease in cash Cash balance at prior year-end Cash balance at current year-end $ 192,900