Question
[The following information applies to the questions displayed below.] The following financial statements and additional information are reported. IKIBAN INC. Comparative Balance Sheets June 30,
[The following information applies to the questions displayed below.]
The following financial statements and additional information are reported.
IKIBAN INC. Comparative Balance Sheets June 30, 2017 and 2016 | ||||||||
2017 | 2016 | |||||||
Assets | ||||||||
Cash | $ | 83,900 | $ | 50,000 | ||||
Accounts receivable, net | 74,000 | 57,000 | ||||||
Inventory | 69,800 | 95,500 | ||||||
Prepaid expenses | 5,000 | 6,600 | ||||||
Total current assets | 232,700 | 209,100 | ||||||
Equipment | 130,000 | 121,000 | ||||||
Accum. depreciationEquipment | (30,000 | ) | (12,000 | ) | ||||
Total assets | $ | 332,700 | $ | 318,100 | ||||
Liabilities and Equity | ||||||||
Accounts payable | $ | 31,000 | $ | 39,000 | ||||
Wages payable | 6,600 | 16,200 | ||||||
Income taxes payable | 4,000 | 5,000 | ||||||
Total current liabilities | 41,600 | 60,200 | ||||||
Notes payable (long term) | 36,000 | 66,000 | ||||||
Total liabilities | 77,600 | 126,200 | ||||||
Equity | ||||||||
Common stock, $5 par value | 232,000 | 166,000 | ||||||
Retained earnings | 23,100 | 25,900 | ||||||
Total liabilities and equity | $ | 332,700 | $ | 318,100 | ||||
IKIBAN INC. Income Statement For Year Ended June 30, 2017 | ||||||
Sales | $ | 708,000 | ||||
Cost of goods sold | 417,000 | |||||
Gross profit | 291,000 | |||||
Operating expenses | ||||||
Depreciation expense | $ | 64,600 | ||||
Other expenses | 73,000 | |||||
Total operating expenses | 137,600 | |||||
153,400 | ||||||
Other gains (losses) | ||||||
Gain on sale of equipment | 2,600 | |||||
Income before taxes | 156,000 | |||||
Income taxes expense | 44,490 | |||||
Net income | $ | 111,510 | ||||
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 $63,600 cash.
Received cash for the sale of equipment that had cost $54,600, yielding a $2,600 gain.
Prepaid Expenses and Wages Payable relate to Other Expenses on the income statement.
All purchases and sales of inventory are on credit.
Required:
(1) Prepare a statement of cash flows for the year ended June 30, 2017, using the indirect method. (Amounts to be deducted should be indicated with a minus sign.)
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