[The following information applies to the questions displayed below.) The following financial statements and additional information are reported. IKISAN INC. Comparative Balance Sheets June 30, 2017 and 2016 2017 2016 Assets Cash $ 99, 100 $ 58,000 Accounts receivable, net 86,000 65,000 Inventory 77,800 107,500 Prepaid expenses 5,800 8,200 Total current assets 268, 700 238,700 Equipment 138,000 129,000 Accum. depreciation-Equipment (34,000 | 16,000) Total assets $372,700 $351, 700 Liabilities and Equity Accounts payable $ 39,000 $ 51,000 Wages payable 7.400 17,800 Income taxes payable 4.800 6,600 Total current liabilities 52,200 75,400 Notes payable (long term) 44,000 74,000 Total liabilities 95,200 149400 Equity Common stock, $5 par value 248.000 174,000 Retained earnings 29,500 28,300 Total liabilities and equity $372,700 $351,700 IKIBAN INC. Income Statement For Year Ended June 30, 2017 Sales Coat of goods sold Gross profit Operating expenses Depreciation expense $ 72,600 Other expenses 81.000 Total operating expenses $748,000 425,000 323,000 153,600 169,400 Other gains (losses) Gain on sale of equipment Income before taxes Income taxed expense Net Income 3,400 172,600 45,290 $127,510 Additional Information 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 $71,600 cash. d. Received cash for the sale of equipment that had cost $62,600. yielding a $3,400 gain. e. Prepaid Expenses and Wages Payable relate to Other Expenses on the income statement f. All purchases and sales of inventory are on credit. Statement of Cash Flows (Indirect Method) For Year Ended June 30, 2017 Cash flows from operating activities Net Income $ 127,510 Adjustments to reconcile net income to net cash provided by operating activities Income statement items not affecting cash Depreciation expense 72,600 Gain on sale of plant assets (3,400) Changes in current operating assets and liabilities Increase in accounts receivable Decrease in inventory Decrease in prepaid expenses Decrease in accounts payable Decrease in wages payable Decrease in income tax payable (21,000) 29.700 2.400 (12,000) (10,400) (1,800) $ 183,610 Net cash provided by operating activities Cash flows from investing activities Cash received from sale of equipment Cash paid for equipment Cash received from sale of equipment Net cash used in investing activities Cash flows from financing activities Cash paid to retire notes 11,400 (71.600) (60,200) 0 $ Net cash provided by financing activities Net increase (decrease) in cash Cash balance at prior year-end Cash balanceamentware and 123,410 $ 12214102