Question

Required information

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The following financial statements and additional information are reported.

IKIBAN INC. Comparative Balance Sheets June 30, 2017 and 2016
	2017				2016
Assets
Cash	$	93,700			$	67,000
Accounts receivable, net		99,500				74,000
Inventory		86,800				121,000
Prepaid expenses		6,700				10,000
Total current assets		286,700				272,000
Equipment		147,000				138,000
Accum. depreciation—Equipment		(38,500	)			(20,500	)
Total assets	$	395,200			$	389,500
Liabilities and Equity
Accounts payable	$	48,000			$	64,500
Wages payable		8,300				19,600
Income taxes payable		5,700				8,400
Total current liabilities		62,000				92,500
Notes payable (long term)		53,000				83,000
Total liabilities		115,000				175,500
Equity
Common stock, $5 par value		266,000				183,000
Retained earnings		14,200				31,000
Total liabilities and equity	$	395,200			$	389,500

  

IKIBAN INC. Income Statement For Year Ended June 30, 2017
Sales				$	793,000
Cost of goods sold					434,000
Gross profit					359,000
Operating expenses
Depreciation expense	$	81,600
Other expenses		90,000
Total operating expenses					171,600
					187,400
Other gains (losses)
Gain on sale of equipment					4,300
Income before taxes					191,700
Income taxes expense					46,190
Net income				$	145,510

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 $80,600 cash.

Received cash for the sale of equipment that had cost $71,600, yielding a $4,300 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. (Amounts to be deducted should be indicated with a minus sign.)

Answer 1

1) Statement of cash flows
for the year ended June 30, 2017
Cash from operating activities:
	Amount $
Net Income	145510
add: depreciation	81600
less:Gain on sale of equipment	-4300
less: AR increases	-25500
add:Inve decreases	34200
add:Prepaid exp decreases	3300
less:AP decreases	-16500
Less:WP decreases	-11300
less:IT pay decreases	-2700
Net cash inflow of operating activities	204310
Cash flow of Investing Activity:
				Acc Dep -Eq
add: sale of eq.	12300		Sold Eq	63600	20500	OB
less: purch of eq.	-80600		CB	38500	81600	dep exp
Net cash outflow of Investing activity	-68300		Total	102100	102100	Total
Cash flow of Financing Activity:			Cash of sale of Eq:
			71600 - 63600 + 4300
less: NP retired	-30000		$12,300
add:CS issued	83000
Less: cash dividend paid	-162310		Cash dividend=
Net cash outflow of financing activity:	-109310		31000+145510-14200
			162310
Net cash inflow of all activities:	26700
Add: Opening cash	67000
Closing Cash	93700