Required information Exercise 16-12 (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. IKIBAN INCORPORATED Comparative Balance Sheets At June 30 Assets Cash Accounts receivable, net Prepaid expenses 2021 2020 $ 92,500 $ 69,000 102,500 88,800 76,000 124,000 6,900 10,400 290,700 279,400 149,000 Inventory Total current assets Equipment Accumulated depreciation-Equipment Total assets Liabilities and Equity Accounts payable Wages payable Income taxes payable Total current liabilities Notes payable (long term) Total liabilities. Equity Common stock, $5 par value Retained earnings Total liabilities and equity (39,500) $ 400,200 $ 50,000 8,500 5,900 140,000 (21,500) $ 397,900 $ 67,500 20,000 8,800 64,400 96,300 55,000 85,000 119,400 181,300 270,000 185,000 10,800 31,600 $ 400,200 $ 397,900 Sales IKIBAN INCORPORATED Income Statement For Year Ended June 30, 2021 Cost of goods sold Gross profit Operating expenses (excluding depreciation) Depreciation expense Other gains (losses) Gain on sale of equipment Income before taxes Income taxes expense Net income $ 803,000 436,000 367,000 92,000 83,600 191,400 4,500 195,900 46,390 $ 149,510 Additional Information a. A $30,000 notes 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. 22 Exercise 16-12 (Algo) Part 1 Required: (1) Prepare a statement of cash flows using the indirect method for the year ended June 30, 2021. (- be indicated with a minus sign.) Cash flows from operating activities Net income IKIBAN, INCORPORATED Statement of Cash Flows (Indirect Method) For Year Ended June 30, 2021 Adjustments to reconcile net income to net cash provided by operating activities Income statement items not affecting cash Depreciation expense Cash paid for equipment 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 Net cash provided by operating activities Cash flows from investing activities $ 149,510 83,600 (4,500) (26,500) 35,200 3,500 (17,500) (11,500) $ 211,810 Required information Net cash provided by operating activities Cash flows from investing activities Cash flows from financing activities $ 211,810 0 0 Net increase (decrease) in cash Cash balance at prior year-end $ 211,810 Cash balance at current year-end $ 211,810