Required information [The following information applies to the questions displayed below.] The following financial statements and additional information are reported. 2019 IKIBAN INC. Comparative Balance Sheets At June 30 2020 Assets Cash $ 87,500 Accounts receivable, net 65,000 Inventory 63,800 Prepaid expenses 4,400 Total current assets 220,700 Equipment 124,000 Accum. depreciation-Equipment (27,000) Total assets $317,700 Liabilities and Equity Accounts payable $ 25,000 Wages payable 6,000 Income taxes payable 3,400 Total current liabilities 34,400 Notes payable (long term) 30,000 Total liabilities 64,400 Equity Common stock, $5 par value 220,000 Retained earnings 33,300 Total liabilities and equity $317,700 $ 44,000 51,000 86,500 5,400 186,900 115,000 (9,000) $ 292,900 $ 30,000 15,000 3,800 48,800 60,000 108,800 160,000 24,100 $ 292,900 IKIBAN INC. Income Statement For Year Ended June 30, 2020 Sales Cost of goods sold Gross profit Operating expenses (excluding depreciation) Depreciation expense $ 678,000 411,000 267,000 67,000 58,600 141,400 Other gains (losses) Gain on sale of equipment Income before taxes Income taxes expense Net income 2,000 143,400 43,890 $ 99,510 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 $57,600 cash. d. Received cash for the sale of equipment that had cost $48,600, yielding a $2,000 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. (1) Prepare a statement of cash flows using the indirect method for the year ended June 30, 2020. (Amounts to be deducted should be indicated with a minus sign.) Answer is not complete. IKIBAN, INC. Statement of Cash Flows (Indirect Method) For Year Ended June 30, 2020 Cash flows from operating activities Net income $ 99,510 Adjustments to reconcile net income to net cash provided by operating activities Income statement items not affecting cash Depreciation expense 58,600 Gain on sale of plant assets (2,000) Increase in accounts receivable Changes in current operating assets and liabilities Decrease in inventory 22,700 Decrease in prepaid expenses 1,000 Decrease in accounts payable (5,000) Decrease in wages payable (9,000) Decrease in income taxes payable (400) Decrease in wages payable Decrease in income taxes payable (9,000) (400) $ 165,410 Net cash provided by operating activities Cash flows from investing activities Cash flows from financing activities 0 $ 165,410 Net increase (decrease) in cash Cash balance at prior year-end Cash balance at current year-end $ 165,410
