Question

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.

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