In: Accounting
Exercise 12-11 Indirect: Preparing statement of cash flows LO P1, P2, P3, A1
[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 | $ | 96,100 | $ | 63,000 | ||||
Accounts receivable, net | 93,500 | 70,000 | ||||||
Inventory | 82,800 | 115,000 | ||||||
Prepaid expenses | 6,300 | 9,200 | ||||||
Total current assets | 278,700 | 257,200 | ||||||
Equipment | 143,000 | 134,000 | ||||||
Accum. depreciation—Equipment | (36,500 | ) | (18,500 | ) | ||||
Total assets | $ | 385,200 | $ | 372,700 | ||||
Liabilities and Equity | ||||||||
Accounts payable | $ | 44,000 | $ | 58,500 | ||||
Wages payable | 7,900 | 18,800 | ||||||
Income taxes payable | 5,300 | 7,600 | ||||||
Total current liabilities | 57,200 | 84,900 | ||||||
Notes payable (long term) | 49,000 | 79,000 | ||||||
Total liabilities | 106,200 | 163,900 | ||||||
Equity | ||||||||
Common stock, $5 par value | 258,000 | 179,000 | ||||||
Retained earnings | 21,000 | 29,800 | ||||||
Total liabilities and equity | $ | 385,200 | $ | 372,700 | ||||
IKIBAN INC. Income Statement For Year Ended June 30, 2017 |
||||||
Sales | $ | 773,000 | ||||
Cost of goods sold | 430,000 | |||||
Gross profit | 343,000 | |||||
Operating expenses | ||||||
Depreciation expense | $ | 77,600 | ||||
Other expenses | 86,000 | |||||
Total operating expenses | 163,600 | |||||
179,400 | ||||||
Other gains (losses) | ||||||
Gain on sale of equipment | 3,900 | |||||
Income before taxes | 183,300 | |||||
Income taxes expense | 45,790 | |||||
Net income | $ | 137,510 | ||||
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 $76,600 cash.
Received cash for the sale of equipment that had cost $67,600, yielding a $3,900 gain.
Prepaid Expenses and Wages Payable relate to Other Expenses on the income statement.
All purchases and sales of inventory are on credit.
Exercise 12-11 Part 1
Required:
(1) Prepare a statement of cash flows for the year ended June 30, 2017, using the indirect method. (Amounts to be deducted should
Statement of cash flow :
Cash flow from operating activities | ||
Net income | 137510 | |
Adjustment to reconcile net income to net cash flow from operating activities | ||
gain on sale of equipment | -3900 | |
Depreciation expense | 77600 | |
Increase account receivable | -23500 | |
Decrease inventory | 32200 | |
Decrease prepaid expense | 2900 | |
Decreae account payable | -14500 | |
Decrease wages payable | -10900 | |
Decrease income tax payable | -2300 | |
57600 | ||
Net cash flow from operating activities | 195110 | |
Cash flow from investing activties | ||
Purchase equipment | -76600 | |
Sale equipment | 11900 | |
Net cash used in investing activities | -64700 | |
Cash flow from financing activities | ||
Repay notes payable | -30000 | |
Issue common Stock | 79000 | |
Dividend paid | -146310 | |
Net cash used in financing activities | -97310 | |
Net cash flow | 33100 | |
Beginning cash | 63000 | |
Ending cash | 96100 | |