The following financial statements and additional information are reported. IKIBAN INCORPORATED Comparative Balance Sheets At June 30 Assets Cash Accounts receivable, net 2021 2020 $ 80,900 $ 55,000 81,500 Inventory Prepaid expenses Total current assets Equipment Accumulated depreciation-Equipment Total assets 74,800 62,000 103,000 5,500 7,600 242,700 227,600 135,000 126,000 (32,500) (14,500) $ 345,200 $ 339,100 Liabilities and Equity Accounts payable $ 36,000 $ 46,500 Wages payable 7,100 17,200 Income taxes payable 4,500 6,000 Total current liabilities 47,600 69,700 Notes payable (long term) 32,200 71,000 Total liabilities 79,800 140,700 Equity Common stock, $5 par value 242,000 171,000 Retained earnings 23,400 27,400 Total liabilities and equity $ 345,200 $ 339,100 IKIBAN INCORPORATED Income Statement Sales Cost of goods sold Gross profit For Year Ended June 30, 2021 $ 733,000 422,000 311,000 78,000 69,600 163,400 3,100 Operating expenses (excluding depreciation) Depreciation expense Other gains (losses) Gain on sale of equipment Income before taxes Income taxes expense Net income Additional Information 166,500 44,990 $121,510 a. A $38,800 note payable is retired at its $38,800 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 $68,600 cash. d. Received cash for the sale of equipment that had cost $59,600, yielding a $3,100 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.