Required information Exercise 16-11 Indirect: Preparing statement of cash flows LO P1, P2, P3, A1 (The following information applies to the questions displayed below.] The following financial statements and additional information are reported. 2016 IKIBAN INC. Comparative Balance Sheets June 30, 2017 and 2016 2017 Assets Cash $ 97,900 Accounts receivable, net 89,000 Inventory 79,800 Prepaid expenses 6,000 Total current assets 272,700 Equipment 140,000 Accum. depreciation-Equipment (35,000) Total assets $377,700 Liabilities and Equity Accounts payable $ 41,000 Wages payable 7,600 Income taxes payable 5,000 Total current liabilities 53,600 $ 60,000 67,000 110,500 8,600 246,100 131,000 (17,000). $360,100 $ 54,000 18,200 7,000 79,200 46,000 99,600 76,000 155, 200 Notes payable (long term) Total liabilities Equity Common stock, $5 par value Retained earnings Total liabilities and equity 252,000 26,100 $377,700 176,000 28,900 $360,100 IKIBAN INC. Income Statement For Year Ended June 30, 2017 Sales Cost of goods sold Gross profit Operating expenses Depreciation expense $ 74,600 Other expenses 83,000 Total operating expenses $758,000 427,000 331,000 157,600 173,400 Other gains (losses) Gain on sale of equipment Income before taxes Income taxes expense Net income 3,600 177,000 45,490 $131,510 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 $73,600 cash. d. Received cash for the sale of equipment that had cost $64,600, yielding a $3,600 gain. e. Prepaid Expenses and Wages Payable relate to Other Expenses on the income statement. f. All purchases and sales of inventory are on credit. Required: (1) Prepare a statement of cash flows for the year ended June 30, 2017, using the indirect method. (Amounts to be deducted should be indicated with a minus sign.) IKIBAN, INC. Statement of Cash Flows (Indirect Method) For Year Ended June 30, 2017 Cash flows from operating activities Net income Adjustments to reconcile net income to net cash provided by operating activities Income statement items not affecting cash Depreciation expense Gain on sale of plant assets Changes in current operating assets and liabilities Increase in accounts receivable Decrease in inventory Decrease in prepaid expenses Decrease in accounts payable Decrease in wages payable Decrease in income taxes payable $ 0 Net cash provided by operating activities Cash flows from investing activities Cash paid for equipment Cash received from sale of equipment 0 Net cash used in investing activities Cash flows from financing activities Cash paid for dividends Cash paid to retire notes Cash received from stock issuance Net cash used in financing activities O $ 0 Net increase (decrease) in cash Cash balance at prior year-end Cash balance at current year-end $ 0