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Exercise 16-11 Indirect: Preparing statement of cash flows LO P1, P2, P3, A1

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The following financial statements and additional information are reported.

IKIBAN INC.

Comparative Balance Sheets

June 30, 2017 and 201620172016AssetsCash$100,900$55,000Accounts receivable, net81,50062,000Inventory74,800103,000Prepaid expenses5,5007,600Total current assets262,700227,600Equipment135,000126,000Accum. depreciationEquipment(32,500)(14,500)Total assets$365,200$339,100Liabilities and EquityAccounts payable$36,000$46,500Wages payable7,10017,200Income taxes payable4,5006,000Total current liabilities47,60069,700Notes payable (long term)41,00071,000Total liabilities88,600140,700EquityCommon stock, $5 par value242,000171,000Retained earnings34,60027,400Total liabilities and equity$365,200$339,100

IKIBAN INC.

Income Statement

For Year Ended June 30, 2017Sales$733,000Cost of goods sold422,000Gross profit311,000Operating expensesDepreciation expense$69,600Other expenses78,000Total operating expenses147,600163,400Other gains (losses)Gain on sale of equipment3,100Income before taxes166,500Income taxes expense44,990Net income$121,510

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 $68,600 cash.
4. Received cash for the sale of equipment that had cost $59,600, yielding a $3,100 gain.
5. Prepaid Expenses and Wages Payable relate to Other Expenses on the income statement.
6. All purchases and sales of inventory are on credit.

Exercise 16-11 Part 1

Required:

(1)Prepare a statement of cash flows for the year ended June 30, 2017, using theindirectmethod.(Amounts to be deducted should be indicated with a minus sign)