Question

[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 $ 103,300 $ 51,000 Accounts receivable, net 75,500 58,000 Inventory 70,800 97,000 Prepaid expenses 5,100 6,800 Total current assets 254,700 212,800 Equipment 131,000 122,000 Accum. depreciation—Equipment (30,500 ) (12,500 ) Total assets $ 355,200 $ 322,300 Liabilities and Equity Accounts payable $ 32,000 $ 40,500 Wages payable 6,700 16,400 Income taxes payable 4,100 5,200 Total current liabilities 42,800 62,100 Notes payable (long term) 37,000 67,000 Total liabilities 79,800 129,100 Equity Common stock, $5 par value 234,000 167,000 Retained earnings 41,400 26,200 Total liabilities and equity $ 355,200 $ 322,300 IKIBAN INC. Income Statement For Year Ended June 30, 2017 Sales $ 713,000 Cost of goods sold 418,000 Gross profit 295,000 Operating expenses Depreciation expense $ 65,600 Other expenses 74,000 Total operating expenses 139,600 155,400 Other gains (losses) Gain on sale of equipment 2,700 Income before taxes 158,100 Income taxes expense 44,590 Net income $ 113,510 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 $64,600 cash. Received cash for the sale of equipment that had cost $55,600, yielding a $2,700 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 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.)

Answer 1

Working Notes:

Cash Received from Customers = Salesi in Income Statement - Increase in Accounts Receivables

Cash payments for Merchandise = Cost of goods sold in Income Statement - Decrease in Inventory + Decrease in Accounts Payable

Cash payments for Other Expenses = Other expense in Income Statement - Decrease in Prepaid Expenses + Decrease in Wages Payable

Cash payments for Income Taxes = Income Tax expense in Income Statement + Decrease in Income Taxes payable

Sale of Equipment: