Question

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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	$	94,300			$	66,000
Accounts receivable, net		98,000				73,000
Inventory		85,800				119,500
Prepaid expenses		6,600				9,800
Total current assets		284,700				268,300
Equipment		146,000				137,000
Accum. depreciation—Equipment		(38,000	)			(20,000	)
Total assets	$	392,700			$	385,300
Liabilities and Equity
Accounts payable	$	47,000			$	63,000
Wages payable		8,200				19,400
Income taxes payable		5,600				8,200
Total current liabilities		60,800				90,600
Notes payable (long term)		52,000				82,000
Total liabilities		112,800				172,600
Equity
Common stock, $5 par value		264,000				182,000
Retained earnings		15,900				30,700
Total liabilities and equity	$	392,700			$	385,300

  

IKIBAN INC. Income Statement For Year Ended June 30, 2017
Sales				$	788,000
Cost of goods sold					433,000
Gross profit					355,000
Operating expenses
Depreciation expense	$	80,600
Other expenses		89,000
Total operating expenses					169,600
					185,400
Other gains (losses)
Gain on sale of equipment					4,200
Income before taxes					189,600
Income taxes expense					46,090
Net income				$	143,510

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 $79,600 cash.

Received cash for the sale of equipment that had cost $70,600, yielding a $4,200 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

Exercise 12-11 Part 1

Required:

(1) Prepare a statement of cash flows for the year ended June 30, 2017, using the indirect method

Answer 1