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The following financial statements and additional information are reported. IKIBAN INC. Comparative Balance Sheets June 30,...

The following financial statements and additional information are reported.
IKIBAN INC.
Comparative Balance Sheets
June 30, 2015 and 2014
2015 2014
  Assets
  Cash $ 114,400 $ 66,300
  Accounts receivable, net 70,000 51,900
  Inventory 65,900 96,600
  Prepaid expenses 4,700 6,100
  Total current assets 255,000 220,900
  Equipment 124,700 114,000
  Accum. depreciation—Equipment (28,800 ) (10,400 )
  Total assets $ 350,900 $ 324,500
  Liabilities and Equity
  Accounts payable $ 26,300 $ 32,700
  Wages payable 7,900 16,300
  Income taxes payable 2,700 4,400
  Total current liabilities 36,900 53,400
  Notes payable (long term) 55,000 75,000
  Total liabilities 91,900 128,400
  Equity
  Common stock, $5 par value 234,000 188,000
  Retained earnings 25,000 8,100
  Total liabilities and equity $ 350,900 $ 324,500

     

IKIBAN INC.
Income Statement
For Year Ended June 30, 2015
  Sales $ 670,000
  Cost of goods sold 408,000
  Gross profit 262,000
  Operating expenses
       Depreciation expense $ 58,300
       Other expenses 66,600
  Total operating expenses 124,900
        137,100  
  Other gains (losses)
       Gain on sale of equipment 2,700
  Income before taxes 139,800
  Income taxes expense 55,920
  Net income $ 83,880

     

Additional Information
a. A $20,000 note payable is retired at its $20,000 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 $59,900 cash.
d. Received cash for the sale of equipment that had cost $49,200, yielding a $2,700 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.

rev: 03_09_2016_QC_CS-44693

4.

value:
6.00 points

Required information

Required:
(1)

Prepare a statement of cash flows for the year ended June 30, 2015, using the indirect method. (Amounts to be deducted should be indicated with a minus sign.)

Solutions

Expert Solution

IKIBAN INC
Statement of Cash Flows  
For the Year Ended June 30, 2015
Cash flows from operating activities
Net Income   $    83,880
Adjustments to reconcile net income to :
Depreciation expense $   58,300
Gain on sale of equipment $   (2,700)
Increase in accounts receivable $ (18,100) 51900-70000
Decrease in inventory $   30,700 96600-65900
Decrease in prepaid expenses $      1,400 6100-4700
Decrease in accounts payable $   (6,400) 26300-32700
Decrease in wages payable $   (8,400) 7900-16300
Decrease in income tax payable $   (1,700) 2700-4400
$    53,100
Net cash provided by operating activities $ 136,980
Cash flows from investing activities
Cash received from sale of equipment $   12,000 49200-(10400+58300-28800)+2700
Cash paid for sale of equipment $ (59,900)
Net cash used by investing activities $ (47,900)
Cash flows from financing activities
Cash paid as dividend $ (66,980) 25000-8100-83880
Cash paid for retire notes $ (20,000)
Cash received from issuance of common stock $   46,000 234000-188000
Net cash used by financing activities $ (40,980)
Net Increase in cash and cash equivalents $    48,100
Cash and cash equivalents at beginning of period $    66,300
Cash and cash equivalents at end of period $ 114,400

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