The following financial statements and additional information are reported. IKIBAN INC. Comparative Balance Sheets June 30, 2017 and 2016 2017 2016 Assets Cash $ 106,900 $ 45,000 Accounts receivable, net 66,500 52,000 Inventory 64,800 88,000 Prepaid expenses 4,500 5,600 Total current assets 242,700 190,600 Equipment 125,000 116,000 Accum. depreciationEquipment (27,500 ) (9,500 ) Total assets $ 340,200 $ 297,100 Liabilities and Equity Accounts payable $ 26,000 $ 31,500 Wages payable 6,100 15,200 Income taxes payable 3,500 4,000 Total current liabilities 35,600 50,700 Notes payable (long term) 31,000 61,000 Total liabilities 66,600 111,700 Equity Common stock, $5 par value 222,000 161,000 Retained earnings 51,600 24,400 Total liabilities and equity $ 340,200 $ 297,100 IKIBAN INC. Income Statement For Year Ended June 30, 2017 Sales $ 683,000 Cost of goods sold 412,000 Gross profit 271,000 Operating expenses Depreciation expense $ 59,600 Other expenses 68,000 Total operating expenses 127,600 143,400 Other gains (losses) Gain on sale of equipment 2,100 Income before taxes 145,500 Income taxes expense 43,990 Net income $ 101,510 Additional Information A $30,000 note payable is retired at its $30,000 carrying (book) value in exchange for cash. The only changes affecting retained earnings are net income and cash dividends paid. New equipment is acquired for $58,600 cash. Received cash for the sale of equipment that had cost $49,600, yielding a $2,100 gain. Prepaid Expenses and Wages Payable relate to Other Expenses on the income statement. All purchases and sales of inventory are on credit.