Required information [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 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 2021 2020 $ 87,500 65,000 63,800 $ 44,000 51,000 86,500 4,400 5,400 186,900 115,000 220,700 124,000 (27,000) $ 317,700 $ 25,000 6,000 (9,000) $ 292,900 $ 30,000 15,000 3,800 3,400 34,400 48,800 30,000 60,000 64,400 108,800 220,000 33,300 160,000 24,100 $ 317,700 $ 292,900 IKIBAN INCORPORATED Income Statement For Year Ended June 30, 2021 Sales Cost of goods sold $ 678,000 411,000 267,000 Gross profit Operating expenses (excluding depreciation) Depreciation expense Other gains (losses) Gain on sale of equipment Income before taxes Income taxes expense Net income Additional Information 67,000 58,600 141,400 2,000 143,400 43,890 $ 99,510 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 $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.