Use the following financial statements and additional information. ONTARIO INCORPORATED Comparative Balance Sheets June 30, 2019 and 2018 2019 2018 $ 130,800 68,000 69,000 5,200 273,000 160,000 (39,000) $ 394,000 $ 76,900 53,000 96,000 6,500 232,400 148,000 (13,000) $ 367,400 Assets Cash Accounts receivable, net Inventory Prepaid expenses Total current assets Equipment Accumulated depreciation-Equipment Total assets Liabilities and Equity Accounts payable Wages payable Income taxes payable Total current liabilities Notes payable (long term) Total liabilities Equity Common stock, $5 par value Retained earnings Total liabilities and equity $ 33,000 6,000 4,000 43,000 43,000 86,000 $ 40,000 16,000 4,400 60,400 85,000 145,400 250,000 58,000 $ 394,000 180,000 42,000 $ 367,400 ONTARIO INCORPORATED Income Statement For Year Ended June 30, 2019 Sales Cost of goods sold Gross profit Operating expenses Depreciation expense $ 70,000 Other expenses 81,000 Total operating expenses $ 835,000 511,000 324,000 $ 151,000 173,000 Other gains (losses) Gain on sale of equipment Income before taxes Income taxes expense Net income 3,700 176,700 54,090 $ 122,610 Additional Information a. A $42,000 note payable is retired at its $42,000 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 $69,000 cash. d. Received cash for the sale of equipment that had cost $57,000, yielding a $3,700 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. Post-closing ONTARIO INCORPORATED Statement of Cash Flows (Direct Method) For Year Ended June 30, 2019 Cash flows from operating activities: Cash received from customers $ 820,000 Cash paid for merchandise (160,000) Cash paid for operating expenses 173,000 Cash paid for income taxes (54,090) $ 778,910 Cash flows from investing activities: Cash received from sale of equipment Cash paid for equipment Net cash provided by investing activities Cash flows from financing activities: Cash received from stock issuance Cash paid to retire notes Cash paid for dividends Net cash used by financing activities