Question

he following financial statements and additional information are reported. IKIBAN 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 51,200 75,400 Notes payable (long term) 44,000 74,000 Total liabilities 95,200 149,400 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 $ 748,000 Cost of goods sold 425,000 Gross profit 323,000 Operating expenses Depreciation expense $ 72,600 Other expenses 81,000 Total operating expenses 153,600 169,400 Other gains (losses) Gain on sale of equipment 3,400 Income before taxes 172,800 Income taxes expense 45,290 Net income $ 127,510 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 $71,600 cash. Received cash for the sale of equipment that had cost $62,600, yielding a $3,400 gain. Prepaid Expenses and Wages Payable relate to Other Expenses on the income statement. All purchases and sales of inventory are on credit. rev: 06_20_2017_QC_CS-91585, 12_05_2017_QC_CS-111198 Required: (1) Prepare a statement of cash flows for the year ended June 30, 2017, using the indirect method.

Answer 1

Ikiban Inc. Statement of Cash Flows For the year ended June 30, 2017
	$	$
Cash Flows from Operating Activities
Net Income		127,510
Adjustments to reconcile net income to net cash flows from operations
Depreciation Expense	72,600
Gain on Sale of Equipment	(3,400)
Increase in Accounts Receivable	(21,000)
Decrease in Inventory	29,700
Decrease in Prepaid Expenses	2,400
Decrease in Accounts Payable	(12,000)
Decrease in Wages Payable	(10,400)
Decrease in Income Taxes Payable	(1,800)	56,100
Net cash provided by Operating Activities		183,610
Cash Flows from Investing Activities
Cash from sale of Equipment	11,400
Cash paid to acquire Equipment	(71,600)
Net cash used in Investing Activities		(60,200)
Cash Flows from Financing Activities
Cash from issuance of Common Stock	74,000
Cash paid for dividends	(126,310)
Cash paid to retire notes payable	(30,000)
Net cash used in Financing Activities		(82,310)
Net increase in cash		41,100
Beginning cash balance		58,000
Ending cash balance		99,100