Required information Exercise 12-12 (Algo) Indirect: Preparing statement of cash flows LO P2, P3, A1 Skip to question [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 $ 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, 2020 Sales $ 803,000 Cost of goods sold 436,000 Gross profit 367,000 Operating expenses (excluding depreciation) 92,000 Depreciation expense 83,600 191,400 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 A $30,000 note payable is retired at its $30,000 carrying (book) value in exchange for cash. The only changes affecting retained earnings are net income and cash dividends paid. New equipment is acquired for $82,600 cash. Received cash for the sale of equipment that had cost $73,600, yielding a $4,500 gain. Prepaid Expenses and Wages Payable relate to Operating Expenses on the income statement. All purchases and sales of inventory are on credit.

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. 2019 IKIBAN INC. Comparative Balance Sheets At June 30 2020 Assets Cash $ 92,500 Accounts receivable, net 102,500 Inventory 88,800 Prepaid expenses 6,900 Total current assets 290,700 Equipment 149,000 Accum. depreciation-Equipment (39,500) Total assets $400,200 Liabilities and Equity Accounts payable $ 50,000 Wages payable 8,500 Income taxes payable 5,900 Total current liabilities 64,400 Notes payable (long term) 55,000 Total liabilities 119,400 Equity Common stock, $5 par value 270,000 Retained earnings 10,800 Total liabilities and equity $400,200 $ 69,000 76,000 124,000 10,400 279,400 140,000 (21,500) $397,900 $ 67,500 20,000 8,800 96,300 85,000 181,300 185,000 31,600 $397,900 IKIBAN INC. Income Statement For Year Ended June 30, 2020 Sales Cost of goods sold Gross profit Operating expenses (excluding depreciation) Depreciation expense $ 803,000 436,000 367,000 92,000 83,600 191,400 Other gains (losses) Gain on sale of equipment Income before taxes Income taxes expense Net income 4,500 195,900 46,390 $ 149,510 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 income and cash dividends paid. c. New equipment is acquired for $82,600 cash. d. Received cash for the sale of equipment that had cost $73,600, yielding a $4,500 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. (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 Adjustments to reconcile net income to net cash provided by operating activities Income statement items not affecting cash Changes in current operating assets and liabilities $ 0 Cash flows from investing activities 0 Cash flows from financing activities 0 $ 0 Net increase (decrease) in cash Cash balance at prior year-end Cash balance at current year-end 0