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 2021 2020 $ 100,300 83,000 $ 56,000 75,800 63,000 104,500 5,600 7,800 264,700 231,300 At June 30 Assets Cash Accounts receivable, net Prepaid expenses 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 IKIBAN INCORPORATED Income Statement 136,000 (33,000) $ 367,700 $ 37,000 7,200 4,600 127,000 (15,000) $ 343,300 $ 48,000 17,400 6,200 48,800 71,600 42,000 72,000 90,800 143,600 244,000 172,000 32,900 27,700 $ 367,700 $ 343,300 For Year Ended June 30. 2021 Equity Common stock, $5 par value Retained earnings Total liabilities and equity IKIBAN INCORPORATED Income Statement 244,000 32,900 172,000 27,700 $ 367,700 $ 343,300 Sales Cost of goods sold For Year Ended June 30, 2021 Gross profit Operating expenses (excluding depreciation) Depreciation expense Other gains (losses) Gain on sale of equipment Income before taxes Income taxes expense Net income $ 738,000 423,000 315,000 79,000 70,600 165,400 3,200 168,600 45,090 $ 123,510 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 $69,600 cash. d. Received cash for the sale of equipment that had cost $60,600, yielding a $3,200 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. IKIBAN, INCORPORATED Statement of Cash Flows (Indirect Method) For Year Ended June 30, 2021 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 Increase in accounts receivable Changes in current operating assets and liabilities Decrease in inventory Decrease in prepaid expenses Decrease in accounts payable Decrease in wages payable Decrease in income taxes payable Net cash provided by operating activities Cash flows from investing activities Cash received from sale of equipment Cash paid for equipment $ 123,510 70,600 (3,200) (20,000) 28,700 2,200 (11,000) (10,200) (1,600) (69,600) $ 179,010 Decrease in income taxes payable Net cash provided by operating activities Cash flows from investing activities Cash received from sale of equipment Cash paid for equipment Cash flows from financing activities Cash received from stock issuance Cash paid to retire notes Cash paid for dividends Net cash used in financing activities Net increase (decrease) in cash Cash balance at prior year-end Cash balance at current year-end (1,600) $ 179,010 (69,600) (69,600) 0 S 109,410 $ 109,410