Question

The following financial statements and additional information are reported.

IKIBAN INC. Comparative Balance Sheets June 30, 2017 and 2016
	2017				2016
Assets
Cash	$	93,100			$	68,000
Accounts receivable, net		101,000				75,000
Inventory		87,800				122,500
Prepaid expenses		6,800				10,200
Total current assets		288,700				275,700
Equipment		148,000				139,000
Accum. depreciation—Equipment		(39,000	)			(21,000	)
Total assets	$	397,700			$	393,700
Liabilities and Equity
Accounts payable	$	49,000			$	66,000
Wages payable		8,400				19,800
Income taxes payable		5,800				8,600
Total current liabilities		63,200				94,400
Notes payable (long term)		54,000				84,000
Total liabilities		117,200				178,400
Equity
Common stock, $5 par value		268,000				184,000
Retained earnings		12,500				31,300
Total liabilities and equity	$	397,700			$	393,700

  

IKIBAN INC. Income Statement For Year Ended June 30, 2017
Sales				$	798,000
Cost of goods sold					435,000
Gross profit					363,000
Operating expenses
Depreciation expense	$	82,600
Other expenses		91,000
Total operating expenses					173,600
					189,400
Other gains (losses)
Gain on sale of equipment					4,400
Income before taxes					193,800
Income taxes expense					46,290
Net income				$	147,510

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 $81,600 cash.

Received cash for the sale of equipment that had cost $72,600, yielding a $4,400 gain.

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 (Direct Method)
For Year Ended June 30, 2017
Cash flows from operating activities
Cash received from customers answer correct
Cash flows from investing activities
		0
Cash flows from financing activities
Cash paid for dividends answer correct
		0
Net increase (decrease) in cash		$
Cash balance at prior year-end		$
Cash balance at current year-end		$

Answer 1

		IKIBAN INC.
		Statement of Cash Flow Direct Method
		For the year ended June 30th,2017
	Cash Flow from operating activities
	Cash Received from customer		$       7,72,000.00	(a)
	Cash Paid to
	To Suppliers	$                                                             4,17,300.00		(b)
	Other Expenses	$                                                                 99,000.00		(C )
			$       5,16,300.00
	Cash paid for Income Taxes		$          49,090.00	(d)
	Net cash provided by operating activities=($772000-$516300-$49090)		$ 2,06,610.00
	Cash Flow from investing activities
	Sale of assets	$                                                                 12,400.00		( e )
	Purchase of Plant Assets	$                                                              (81,600.00)	$        (69,200.00)	(f)
	Net cash used by investing activities
	Cash flow from financing activities
	Cash received from common stock issue($268000-$184000)	$                                                                 84,000.00
	Dividend payment	$                                                           (1,66,310.00)		(g)
	Note Payable($84000-$54000)	$                                                              (30,000.00)
	Net cash used by financing activities		$    (1,12,310.00)
	Net increase in cash		$          25,100.00
	Cash January 1,2017		$          68,000.00
	Cash December 31st 2017		$          93,100.00
	Working
a	Cash received from customer
	Sales		$       7,98,000.00
	Less:Increase in accounts receivable		$          26,000.00
	Cash received from customer		$       7,72,000.00
b	Cash paid to supplier
	Cost of goods sold		$       4,35,000.00
	Less:Decrease in accounts payable		$          17,000.00
	Less: Decrease in inventory		$        (34,700.00)
	Cash paid to supplier		$       4,17,300.00
c	Operating Expenses
	Other Expenses(Given)		$          91,000.00
	less:Decrease in prepaid Expenses(6800-10200)		$          (3,400.00)
	Add: Decrease in Salary Payable=(8400-19800)		$          11,400.00
	Total		$          99,000.00
d)	Income Tax Expense		$          46,290.00
	Plus: Decrease in Income tax Payable		$             2,800.00
	Cash Paid for Income taxes		$          49,090.00
e)
	Accumulated Depreciation
To Equipment	$                                                                                 64,600.00	By Bal b/d	$          21,000.00
To Bal c/d	$                                                                                 39,000.00	By Depreciation Expenses	$          82,600.00
	$                                                                             1,03,600.00		$       1,03,600.00
f)
	Equipment
To Bal b/d	$                                                                             1,39,000.00	By Bank	$          12,400.00
To Bank	$                                                                                 81,600.00	By Accumulated Depreciation	$          64,600.00
To Gain on sale of equipment	$                                                                                   4,400.00
		By Bal C/d	$       1,48,000.00
	$                                                                             2,25,000.00		$       2,25,000.00
g )
	Beginning Retained Earningas	$                                                                 31,300.00
	Add: Net Income	$                                                             1,47,510.00
	Less: Dividend Paid	$                                                             1,66,310.00
	Ending Retained Earnings	$                                                                 12,500.00