Question

Required 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	$	105,100			$	48,000
Accounts receivable, net		71,000				55,000
Inventory		67,800				92,500
Prepaid expenses		4,800				6,200
Total current assets		248,700				201,700
Equipment		128,000				119,000
Accum. depreciation—Equipment		(29,000	)			(11,000	)
Total assets	$	347,700			$	309,700
Liabilities and Equity
Accounts payable	$	29,000			$	36,000
Wages payable		6,400				15,800
Income taxes payable		3,800				4,600
Total current liabilities		39,200				56,400
Notes payable (long term)		34,000				64,000
Total liabilities		73,200				120,400
Equity
Common stock, $5 par value		228,000				164,000
Retained earnings		46,500				25,300
Total liabilities and equity	$	347,700			$	309,700

  

IKIBAN INC. Income Statement For Year Ended June 30, 2017
Sales				$	698,000
Cost of goods sold					415,000
Gross profit					283,000
Operating expenses
Depreciation expense	$	62,600
Other expenses		71,000
Total operating expenses					133,600
					149,400
Other gains (losses)
Gain on sale of equipment					2,400
Income before taxes					151,800
Income taxes expense					44,290
Net income				$	107,510

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 $61,600 cash.

Received cash for the sale of equipment that had cost $52,600, yielding a $2,400 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

Required:

(1) Prepare a statement of cash flows for the year ended June 30, 2017, using the indirect method. (Amounts to be deducted should be indicated with a minus sign.)

Answer 1