Question

The following financial statements and additional information are reported.

IKIBAN INC. Comparative Balance Sheets June 30, 2017 and 2016
	2017				2016
Assets
Cash	$	92,500			$	69,000
Accounts receivable, net		102,500				76,000
Inventory		88,800				124,000
Prepaid expenses		6,900				10,400
Total current assets		290,700				279,400
Equipment		149,000				140,000
Accum. depreciation—Equipment		(39,500	)			(21,500	)
Total assets	$	400,200			$	397,900
Liabilities and Equity
Accounts payable	$	50,000			$	67,500
Wages payable		8,500				20,000
Income taxes payable		5,900				8,800
Total current liabilities		64,400				96,300
Notes payable (long term)		55,000				85,000
Total liabilities		119,400				181,300
Equity
Common stock, $5 par value		270,000				185,000
Retained earnings		10,800				31,600
Total liabilities and equity	$	400,200			$	397,900

  

IKIBAN INC. Income Statement For Year Ended June 30, 2017
Sales				$	803,000
Cost of goods sold					436,000
Gross profit					367,000
Operating expenses
Depreciation expense	$	83,600
Other expenses		92,000
Total operating expenses					175,600
					191,400
Other gains (losses)
Gain on sale of equipment					4,500
Income before taxes					195,900
Income taxes expense					46,390
Net income				$	149,510

Additional Information

a. A $30,000 note payable is retired at its $30,000 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 $82,600 cash.

d. Received cash for the sale of equipment that had cost $73,600, yielding a $4,500 gain.

e. Prepaid Expenses and Wages Payable relate to Other Expenses on the income statement.

All purchases and sales of inventory are on credit.

IKIBAN, INC.

Statement of Cash Flows (Indirect Method)

For Year Ended June 30, 2017

Cash flows from operating activities

Adjustments to reconcile net income to net cash provided by operating activities

Income statement items not affecting cash

Changes in current operating assets and liabilities

$0Cash flows from investing activities

Cash flows from financing activities

Net increase (decrease) in cash

Cash balance at prior year-end

Cash balance at current year-end

Answer 1

Answer:

Calculation:
Depreciation on Equipment Sold = Accumulated Depreciation, Beginning + Depreciation Expense - Accumulated Depreciation, Ending
Depreciation on Equipment Sold = $21,500 + $83,600 - $39,500
Depreciation on Equipment Sold = $65,600
Proceed from Equipment Sold = Cost of Equipment Sold - Depreciation on Equipment Sold + Gain on Sale of Equipment
Proceed from Equipment Sold = $73,600 - $65,600 + $4,500
Proceed from Equipment Sold = $12,500
Ending Retained Earning = Beginning Retained Earning + Net Income – Dividend Paid
$10,800 = $31,600 + $149,510 – Dividend Paid
Dividend Paid = $170,310