Required information [The following information applies to the questions displayed below.) The following financial statements and additional information are reported. 2020 IKIBAN INCORPORATED Comparative Balance Sheets At June 30 2021 Assets Cash $ 104,500 Accounts receivable, net 72,500 Inventory 68,800 Prepaid expenses 4,900 Total current assets 250,700 Equipment 129,000 Accumulated depreciation-Equipment (29,500) Total assets $ 350, 200 Liabilities and Equity Accounts payable $ 30,000 Wages payable 6,500 Income taxes payable 3,900 Total current liabilities 40,400 Notes payable (long term) 35,000 Total liabilities 75,400 Equity Common stock, $5 par value 230,000 Retained earnings 44,800 Total liabilities and equity $ 350,200 $ 49,000 56,000 94,000 6,400 205, 400 120,000 (11,500) $ 313,900 $ 37,500 16,000 4,800 58,300 65,000 123, 300 165,000 25,600 $ 313,900 IKIBAN INCORPORATED Income Statement For Year Ended June 30, 2021 Sales Cost of goods sold Gross profit Operating expenses (excluding depreciation) Depreciation expense $ 703,000 416,000 287,000 72,000 63,600 151,400 Other gains (losses) Gain on sale of equipment Income before taxes Income taxes expense Net income 2,500 153,900 44,390 $ 109,510 Additional Information a. A $30,000 notes 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 $62,600 cash. d. Received cash for the sale of equipment that had cost $53,600, yielding a $2,500 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. Required: (1) Prepare a statement of cash flows using the indirect method for the year ended June 30, 2021. (Amounts to be deducted should be indicated with a minus sign.) Answer is complete but not entirely correct. IKIBAN, INCORPORATED Statement of Cash Flows (Indirect Method) For Year Ended June 30, 2021 Cash flows from operating activities Net income Adjustments to reconcile net income to net cash provided by operating activities Income statement items not affecting cash Depreciation expense Gain on sale of plant assets $ 109,510 lo 63,600 (2,500) Changes in current operating assets and liabilities Decrease in inventory Decrease in accounts payable Increase in accounts receivable Decrease in prepaid expenses Decrease in wages payable Decrease in income taxes payable OOOO 25,200 (7,500) (16,500) 1,500 (9,500) (900) $ 162,910 Net cash provided by operating activities Cash flows from investing activities Cash received from sale of equipment Cash paid for equipment 10,500 (62,600) (52,100) Net cash used in investing activities Cash flows from financing activities Cash received from stock issuance Cash paid to retire notes Cash paid for dividends OOO 65,000 (30,000) (135,780) X > (100,780) 10,030 $ Net cash used in financing activities Net increase (decrease) in cash Cash balance at prior year-end Cash balance at current year-end 49,000 59,030 $
