Question

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The following financial statements and additional information are reported.

IKIBAN INC. Comparative Balance Sheets June 30, 2017 and 2016
	2017				2016
Assets
Cash	$	96,100			$	63,000
Accounts receivable, net		93,500				70,000
Inventory		82,800				115,000
Prepaid expenses		6,300				9,200
Total current assets		278,700				257,200
Equipment		143,000				134,000
Accum. depreciation—Equipment		(36,500	)			(18,500	)
Total assets	$	385,200			$	372,700
Liabilities and Equity
Accounts payable	$	44,000			$	58,500
Wages payable		7,900				18,800
Income taxes payable		5,300				7,600
Total current liabilities		57,200				84,900
Notes payable (long term)		49,000				79,000
Total liabilities		106,200				163,900
Equity
Common stock, $5 par value		258,000				179,000
Retained earnings		21,000				29,800
Total liabilities and equity	$	385,200			$	372,700

  

IKIBAN INC. Income Statement For Year Ended June 30, 2017
Sales				$	773,000
Cost of goods sold					430,000
Gross profit					343,000
Operating expenses
Depreciation expense	$	77,600
Other expenses		86,000
Total operating expenses					163,600
					179,400
Other gains (losses)
Gain on sale of equipment					3,900
Income before taxes					183,300
Income taxes expense					45,790
Net income				$	137,510

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 $76,600 cash.

Received cash for the sale of equipment that had cost $67,600, yielding a $3,900 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

Statement of cash flows for the year ended June 30, 2017
(Direct method)
Cash flow from operating activities
Cash collection from sale *		749500
Cash payment for cost of goods sold **		-412300
Cash payment for operating expenses ***		-94000
Cash payment of income taxes ****		-48090
Net cash flow from operating activities		195110
Cash flow from investing activities
Sale of equipment *****	11900
Purchase of equipment	-76600
Net cash flow from investing activities		-64700
Cash flow from financing activities
Retirement of note payable	-30000
Issue of common stock	79000
Cash dividends paid ******	-146310
Net cash flow from financing activities		-97310
Net cash flow		33100
Cash balance as on July1, 2016		63000
Cash balance as on June 30, 2017		96100
Cash from sale
Accounts receivable as on July 1, 2016	70000
Plus : Sale for the year	773000
Total	843000
Less: Accounts receivable as on June 30, 2017	93500
Cash collection from sale *	749500
Cash payment for cost of goods sold
Cost of goods sold for the year	430000
Plus: Ending balance of inventory	82800
Total	512800
Less: Beginning balance of inventory	115000
Purchase of inventory	397800
Plus: Beginning accounts payable	58500
	456300
Less: Ending accounts payable	44000
Cash payment for cost of goods sold **	412300
Cash payment for operating expenses
Other operating expenses for the year	86000
Plus: Ending prepaid expeses	6300
	92300
Less; Beginning prepaid expenses	9200
	83100
Add: Beginning balance of wages payable	18800
	101900
Less: Ending balance of wages payable	7900
Cash payment for operating expenses ***	94000
Paymnt of taxes
Income tax payable on July 1, 2016	7600
Plus: Income tax for the year	45790
	53390
Less: Income tax payable on June 30, 2017	5300
Cash payment for income taxes ****	48090
Depreciation on equipment sold
Accumulated depreciation on July 1, 2016	18500
Plus : Depreciation for the year	77600
Total Accumulated Depreciation	96100
Less: Accumulated depreciation on June30, 2017	36500
Depreciation on the equipment sold *	59600
Cash from sale of equipment
Cost of the equipment sold	67600
Less: Depreciation on the equipment sold *	59600
Book value of the equipment sold	8000
Plus : Gain on sale of equipment	3900
Cash from sale of equipment *****	11900
Dvidends paid
Retained earnings on July 1, 2016	29800
Plus: Net income for the year	137510
Total	167310
Less: Retained earnings on June 30, 2017	21000
Cash dividends paid ******	146310