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Exercise 12-12 (Algo) 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
At June 30	2020				2019
Assets
Cash	$	96,700			$	62,000
Accounts receivable, net		92,000				69,000
Inventory		81,800				113,500
Prepaid expenses		6,200				9,000
Total current assets		276,700				253,500
Equipment		142,000				133,000
Accum. depreciationEquipment		(36,000	)			(18,000	)
Total assets	$	382,700			$	368,500
Liabilities and Equity
Accounts payable	$	43,000			$	57,000
Wages payable		7,800				18,600
Income taxes payable		5,200				7,400
Total current liabilities		56,000				83,000
Notes payable (long term)		48,000				78,000
Total liabilities		104,000				161,000
Equity
Common stock, $5 par value		256,000				178,000
Retained earnings		22,700				29,500
Total liabilities and equity	$	382,700			$	368,500

IKIBAN INC. Income Statement For Year Ended June 30, 2020
Sales	$	768,000
Cost of goods sold		429,000
Gross profit		339,000
Operating expenses (excluding depreciation)		85,000
Depreciation expense		76,600
		177,400
Other gains (losses)
Gain on sale of equipment		3,800
Income before taxes		181,200
Income taxes expense		45,690
Net income	$	135,510

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 $75,600 cash.
4. Received cash for the sale of equipment that had cost $66,600, yielding a $3,800 gain.
5. Prepaid Expenses and Wages Payable relate to Operating Expenses on the income statement.
6. 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. (Amounts to be deducted should be indicated with a minus sign.)