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 2021 2020 $ 94,900 $ 65,000 96,500 Inventory Total current assets Equipment Accumulated depreciation-Equipment Total assets Liabilities and Equity 84,800 72,000 118,000 6,500 9,600 282,700 264,600 145,000 (37,500) $ 390,200 $ 46,000 8,100 136,000 (19,500) $ 381,100 $ 61,500 19,200 Accounts payable Wages payable Income taxes payable 5,500 8,000 Total current liabilities 59,600 88,700 Notes payable (long term) 51,000 81,000 Total liabilities 110,600 169,700 Equity Common stock, $5 par value 262,000 181,000 Retained earnings 17,600 30,400 Total liabilities and equity $ 390,200 $ 381,100 Sales IKIBAN INCORPORATED Income Statement For Year Ended June 30, 2021 $ 783,000 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 432,000 351,000 88,000 $79,600 183,400 4,100 187,500 45,990 $ 141,510 a. A $30,000 notes 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 $78,600 cash. d. Received cash for the sale of equipment that had cost $69,600, yielding a $4,100 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.