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Exercise 16-12 (Algo) Indirect: Preparing statement of cash flows LO P2, P3, A1

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The following financial statements and additional information are reported.

IKIBAN INCORPORATED
Comparative Balance Sheets
At June 30	2021	2020
Assets
Cash	$ 102,100	$ 53,000
Accounts receivable, net	78,500	60,000
Inventory	72,800	100,000
Prepaid expenses	5,300	7,200
Total current assets	258,700	220,200
Equipment	133,000	124,000
Accumulated depreciationEquipment	(31,500)	(13,500)
Total assets	$ 360,200	$ 330,700
Liabilities and Equity
Accounts payable	$ 34,000	$ 43,500
Wages payable	6,900	16,800
Income taxes payable	4,300	5,600
Total current liabilities	45,200	65,900
Notes payable (long term)	39,000	69,000
Total liabilities	84,200	134,900
Equity
Common stock, $5 par value	238,000	169,000
Retained earnings	38,000	26,800
Total liabilities and equity	$ 360,200	$ 330,700

IKIBAN INCORPORATED
Income Statement
For Year Ended June 30, 2021
Sales	$ 723,000
Cost of goods sold	420,000
Gross profit	303,000
Operating expenses (excluding depreciation)	76,000
Depreciation expense	67,600
	159,400
Other gains (losses)
Gain on sale of equipment	2,900
Income before taxes	162,300
Income taxes expense	44,790
Net income	$ 117,510

Additional Information

1. A $30,000 notes 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 $66,600 cash.
4. Received cash for the sale of equipment that had cost $57,600, yielding a $2,900 gain.
5. Prepaid Expenses and Wages Payable relate to Operating Expenses on the income statement.
6. All purchases and sales of inventory are on credit.

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.

Note: Amounts to be deducted should be indicated with a minus sign.