Required information Exercise 12-12 (Algo) 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. IKIBAN INCORPORATED Comparative Balance Sheets At June 30 Assets Cash Accounts receivable, net Prepaid expenses Inventory Total current assets Equipment Accumulated depreciation-Equipment Total assets Liabilities and Equity 2020 2819 $ 100,900 81,500 $ 55,000 74,800 62,000 103,000 5,500 262,700 7,600 227,600 135,000 (32,500) 126,000 (14,500) $ 365,200 $339,100 Accounts payable $ 36,000 Wages payable 7,100 $ 46,500 17,200 Income taxes payable 4,588 6,000 Total current liabilities 47,688 69,700 Notes payable (long term) 41,000 71,000 Total liabilities 88,600 140,700 Equity Common stock, $5 par value 242,000 171,000 Retained earnings 34,600 27,400 Total liabilities and equity $365,208 $339,100 IKIBAN INCORPORATED Income Statement For Year Ended June 30, 2020 $ 733,000 422,000 311,000 78,000 69,600 Sales Cost of goods sold Gross profit Operating expenses (excluding depreciation) Depreciation expense Other gains (losses) Gain on sale of equipment Income before taxes Income taxes expense Net income Additional Information 163,400 3,100 166,500 44,998 $ 121,518 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 income and cash dividends paid. c. New equipment is acquired for $68,600 cash. d. Received cash for the sale of equipment that had cost $59,600, yielding a $3,100 gain. e. Prepaid Expenses and Wages Payable relate to Operating Expenses on the income statement. f. 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, 2020. Note: Amounts to be deducted should be indicated with a minus sign. IKIBAN, INCORPORATED Cash flows from operating activities Net income Statement of Cash Flows (Indirect Method) For Year Ended June 30, 2019 Adjustments to reconcile net income to net cash provided by operating activities Income statement items not affecting cash Decrease in accounts receivable Changes in current operating assets and liabilities $ 121,510 81,500 $ 203,010 Cash flows from investing activities Cash flows from financing activities 0 Net increase (decrease) in cash Cash balance at prior year-end Cash balance at current year-end $ 203,010 $ 203,010