Required information

Exercise 16-10 Indirect: Preparation of statement of cash flows LO P1

[The following information applies to the questions displayed below.]

The following financial statements and additional information are reported.

IKIBAN INC. Comparative Balance Sheets June 30, 2013 and 2012
	2013				2012
Assets
Cash	$	110,200			$	66,700
Accounts receivable, net		69,600				51,500
Inventory		66,600				96,400
Prepaid expenses		5,600				5,100
Equipment		121,300				111,000
Accum. depreciationEquipment		(28,100	)			(10,700	)
Total assets	$	345,200			$	320,000
Liabilities and Equity
Accounts payable	$	26,700			$	32,700
Wages payable		7,300				16,200
Income taxes payable		2,200				4,300
Notes payable (long term)		49,000				74,000
Common stock, $5 par value		235,000				185,000
Retained earnings		25,000				7,800
Total liabilities and equity	$	345,200			$	320,000

IKIBAN INC. Income Statement For Year Ended June 30, 2013
Sales				$	669,000
Cost of goods sold					405,000
Gross profit					264,000
Operating expenses
Depreciation expense	$	58,500
Other expenses		66,800
Total operating expenses					125,300
					138,700
Other gains (losses)
Gain on sale of equipment					2,200
Income before taxes					140,900
Income taxes expense					56,360
Net income				$	84,540

Additional Information

a.	A $25,000 note payable is retired at its $25,000 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 $59,500 cash.
d.	Received cash for the sale of equipment that had cost $49,200, yielding a $2,200 gain.
e.	Prepaid Expenses and Wages Payable relate to Other Expenses on the income statement.
f.	All purchases and sales of merchandise inventory are on credit.

rev: 10_03_2013_QC_36920

Required information Cash flows from operating activities Net income 84,540 Adjustments to reconcile net income to net cash provided by operating activities Depreciation expense 58,500 Decrease in wages payable 7,300 Decrease in income taxes payable 2,200 26,700 Decrease in accounts payable Gain on sale of plant assets $ 179,240 Cash flows from investing activities Cash paid for equipment (8,400) (8,400) Cash flows from financing activities Cash received from stock issuance 10,000 10,000 Net increase (decrease) in cash $ 180,840 Cash balance at prior year-end 35,500 $ 216,340 Cash balance at current year-end