Question

In: Accounting

The following information applies to the questions displayed below.] The following financial statements and additional 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 $ 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

  1. A $30,000 note payable is retired at its $30,000 carrying (book) value in exchange for cash.
  2. The only changes affecting retained earnings are net income and cash dividends paid.
  3. New equipment is acquired for $79,600 cash.
  4. Received cash for the sale of equipment that had cost $70,600, yielding a $4,200 gain.
  5. Prepaid Expenses and Wages Payable relate to Other Expenses on the income statement.
  6. All purchases and sales of inventory are on credit.

rev: 12_05_2017_QC_CS-111198

Using the direct method, prepare the statement of cash flows for the year ended June 30, 2017. (Amounts to be deducted should be indicated with a minus sign.)

Solutions

Expert Solution

IKIBAN, INC.
Statement of Cash Flows (Direct Method)
For Year Ended June 30, 2017
Cash flows from operating activities
Cash received from customers 763,000 =788000+73000-98000
Cash paid for inventory -415,300 =433000+85800-119500+63000-47000
Cash paid for operating expenses -97,000 =89000+19400-8200+6600-9800
Cash paid for income taxes -48,690 =46090+8200-5600
Net cash provided by operating activities 202,010
Cash flows from investing activities
Cash received from sale of equipment 12,200
Cash paid for equipment -79,600
Net cash used in investing activities -67,400
Cash flows from financing activities
Cash received from stock issuance 82,000
Cash paid to retire notes -30,000
Cash paid for dividends -158,310 =30700+143510-15900
Net cash used in financing activities -106,310
Net increase (decrease) in cash 28,300
Cash balance at prior year-end 66,000
Cash balance at current year-end 94,300
Workings:
Cash received from sale of equipment:
Cost of Equipment sold 70600
Less: Accumulated depreciation on Equipment 62600 =20000+80600-38000
Book value of Equipment 8000
Add: Gain on sale of Equipment 4200
Cash received from sale of equipment 12200
Adjustment workings:
Cash received from customers = Sales revenue+Change in Accounts Receivable
Cash paid for inventory = Cost of goods sold+Change in inventory+Change in Accounts Payable
Cash paid for operating expenses = Operating expenses+Change in wages payable+Change in prepaid expenses
Cash paid for income taxes = Income tax expense+Change in Income taxes payable
Cash paid for dividends = Net income+Change in retained earnings

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