Question

The following financial statements and additional information are reported.

IKIBAN INC. Comparative Balance Sheets June 30, 2019 and 2018
	2019				2018
Assets
Cash	$	102,700			$	52,000
Accounts receivable, net		77,000				59,000
Inventory		71,800				98,500
Prepaid expenses		5,200				7,000
Total current assets		256,700				216,500
Equipment		132,000				123,000
Accum. depreciation—Equipment		(31,000	)			(13,000	)
Total assets	$	357,700			$	326,500
Liabilities and Equity
Accounts payable	$	33,000			$	42,000
Wages payable		6,800				16,600
Income taxes payable		4,200				5,400
Total current liabilities		44,000				64,000
Notes payable (long term)		38,000				68,000
Total liabilities		82,000				132,000
Equity
Common stock, $5 par value		236,000				168,000
Retained earnings		39,700				26,500
Total liabilities and equity	$	357,700			$	326,500

  

IKIBAN INC. Income Statement For Year Ended June 30, 2019
Sales				$	718,000
Cost of goods sold					419,000
Gross profit					299,000
Operating expenses
Depreciation expense	$	66,600
Other expenses		75,000
Total operating expenses					141,600
					157,400
Other gains (losses)
Gain on sale of equipment					2,800
Income before taxes					160,200
Income taxes expense					44,690
Net income				$	115,510

Additional Information

1. A $30,000 note payable is retired at its $30,000 carrying (book) value in exchange for cash.
2. The only changes affecting retained earnings are net income and cash dividends paid.
3. New equipment is acquired for $65,600 cash.
4. Received cash for the sale of equipment that had cost $56,600, yielding a $2,800 gain.
5. Prepaid Expenses and Wages Payable relate to Other Expenses on the income statement.
6. All purchases and sales of inventory are on credit.

Required:

(1) Prepare a statement of cash flows using the indirect method for the year ended June 30, 2019. (Amounts to be deducted should be indicated with a minus sign.)

Answer 1