The following financial statements and additional information are reported: IKIBAN INC. Income Statement For the year ended June 30, 2016 Sales $678,000 Cost of goods sold 411,000 Gross profit 267,000 Operating expenses Other expenses $67,000 Depreciation expense 58,600 Total operating expenses 125,600 141,400 Gain on sale of equipment 2,000 Income before taxes 143,400 Income taxes expense 43,890 Net income $99,510 IKIBAN INC. Comparative Balance Sheets 2016 2015 Assets Cash $87,500 $44,000 Accounts receivable, net 65,000 51,000 Inventory 63,800 86,500 Prepaid expenses 4,400 5,400 Equipment 124,000 115,000 Accum. Depreciation - Equipment (27,000) (9,000) Total Assets $317,700 $292,900 Liabilities and equity Accounts payable $25,000 $30,000 Wages payable 6,000 15,000 Income taxes payable 3,400 3,800 Notes payable (long-term) 30,000 60,000 Common stock, $5 par value 220,000 160,000 Retained earnings 33,300 24,100 Total Liabilities and Equity $317,700 $292,900 Prepare a statement of cash flows for the year ended June 30, 2016 using the direct method. 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 Other expenses on the income statement. f. All purchases and sales of merchandise inventory are on credit.

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Exercise 12 The following financial statements and additional information are reported: IKIBAN INC. Income Statement For the year ended June 30, 2016 Sales $678,000 Cost of goods sold 411.0:00 Gross profit 267,000 Operating expenses Other expenses $67,000 Depreciation expense 58,600 Total operating expenses 125.000 141,400 Gain on sale of equipment 2.000 Income before taxes 143,400 Income taxes expense 43,890 Net income $99.510 IKIBAN INC. Comparative Balance Sheets 2016 2015 Assets Cash $87,500 $44,000 Accounts receivable, net 65,000 51,000 Inventory 63,800 86,500 Prepaid expenses 4,400 5,400 Equipment 124,000 115,000 Accum. Depreciation - Equipment 27,000) (9,000) Total Assets $317,700 $292,900 Liabilities and equity Accounts payable $25,000 $30,000 Wages payable 6,000 15,000 Income taxes payable 3,400 3,800 Notes payable (long-term) 30,000 60,000 Common stock, $5 par value 220,000 160,000 Retained earnings 33,300 24,100 Total Liabilities and Equity $317,700 $292,900 Prepare a statement of cash flows for the year ended June 30, 2016 using the direct method. 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 Other expenses on the income statement f. All purchases and sales of merchandise inventory are on credit