Question

Required information [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 $ 92,500 $ 69,000 Accounts receivable, net 102,500 76,000 Inventory 88,800 124,000 Prepaid expenses 6,900 10,400 Total current assets 290,700 279,400 Equipment 149,000 140,000 Accum. depreciation—Equipment (39,500 ) (21,500 ) Total assets $ 400,200 $ 397,900 Liabilities and Equity Accounts payable $ 50,000 $ 67,500 Wages payable 8,500 20,000 Income taxes payable 5,900 8,800 Total current liabilities 64,400 96,300 Notes payable (long term) 55,000 85,000 Total liabilities 119,400 181,300 Equity Common stock, $5 par value 270,000 185,000 Retained earnings 10,800 31,600 Total liabilities and equity $ 400,200 $ 397,900 IKIBAN INC. Income Statement For Year Ended June 30, 2017 Sales $ 803,000 Cost of goods sold 436,000 Gross profit 367,000 Operating expenses Depreciation expense $ 83,600 Other expenses 92,000 Total operating expenses 175,600 191,400 Other gains (losses) Gain on sale of equipment 4,500 Income before taxes 195,900 Income taxes expense 46,390 Net income $ 149,510 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 $82,600 cash. Received cash for the sale of equipment that had cost $73,600, yielding a $4,500 gain. Prepaid Expenses and Wages Payable relate to Other Expenses on the income statement. All purchases and sales of inventory are on credit. rev: 12_05_2017_QC_CS-111198 (2) Compute the company's cash flow on total assets ratio for its fiscal year 2017.

Answer 1

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Balance Sheet	2017	2016		Income statement	2017
Assets				Sales	803,000.00
Cash	92,500.00	69,000.00		Cost of Goods sold	436,000.00
Accounts receivable	102,500.00	76,000.00		Gross Profit	367,000.00
Inventory	88,800.00	124,000.00		Operating expenses
Prepaid Expense	6,900.00	10,400.00		Depreciation expense	83,600.00
Total Current Assets	290,700.00	279,400.00		Other expense	92,000.00
Equipment	149,000.00	140,000.00		Total Operating expenses	175,600.00
Accumulated depreciation	(39,500.00)	(21,500.00)		Operating income	191,400.00
Total assets	400,200.00	397,900.00		Other gains (losses)
				Gain on sale of equipment	4,500.00
Liabilities & Equity				Income before taxes	195,900.00
Accounts payable	50,000.00	67,500.00		Income taxes expense	46,390.00
Wages payable	8,500.00	20,000.00		Net income	149,510.00
Income tax payable	5,900.00	8,800.00
Total Current Liabilities	64,400.00	96,300.00		A $30,000 note payable is retired at its $30,000 carrying (book) value in exchange for cash.
Notes Payable (long term)	55,000.00	85,000.00		The only changes affecting retained earnings are net income and cash dividends paid.
Total liabilities	119,400.00	181,300.00		New equipment is acquired for $82,600 cash. Received cash for the sale of equipment that had cost $73,600, yielding a $4,500 gain.
Equity Common stock, $5 par value	270,000.00	185,000.00		Prepaid Expenses and Wages Payable relate to Other Expenses on the income statement.
Retained earnings	10,800.00	31,600.00		All purchases and sales of inventory are on credit
Total liabilities and equity	400,200.00	397,900.00
Net Cash flow from operating activities
Particulars	Amount $
Net income	149,510.00
Add: Depreciation Expense	83,600.00
Less: Gain on sale of equipment	4,500.00
Cash flow from Operations	228,610.00
Changes in working capital
Decrease in Inventory	35,200.00
Increase in Accounts Receivable	(26,500.00)
Decrease in Prepaid Expense	3,500.00
Decrease in Accounts Payable	(17,500.00)
Decrease in Wages Payable	(11,500.00)
Decrease in Income Taxes Payable	(2,900.00)
Net Cash flow from operating activities	208,910.00	A
Average Total Assets	399,050.00	B
cash flow on total assets ratio for its fiscal year 2017=		0.52	C=A/B