Question

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: 12_05_2017_QC_CS-111198

Exercise 12-11 Part 1

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.)

IKIBAN, INC. Statement of Cash Flows (Indirect Method) For Year Ended June 30, 2017 Cash flows from operating activities Adjustments to reconcile net income to net cash provided by operating activities Income statement items not affecting cash Changes in current operating assets and liabilities $0 Cash flows from investing activities 0 Cash flows from financing activities 0 Net increase (decrease) in cash $0 Cash balance at prior year-end Cash balance at current year-end $0

(2) Compute the company's cash flow on total assets ratio for its fiscal year 2017.

	Cash Flow on Total Assets Ratio Choose Numerator: / Choose Denominator: = Cash Flow on Total Assets Ratio / = Cash flow on total assets ratio / = 0

Golden Corp., a merchandiser, recently completed its 2017 operations. For the year, (1) all sales are credit sales, (2) all credits to Accounts Receivable reflect cash receipts from customers, (3) all purchases of inventory are on credit, (4) all debits to Accounts Payable reflect cash payments for inventory, (5) Other Expenses are all cash expenses, and (6) any change in Income Taxes Payable reflects the accrual and cash payment of taxes. The company’s balance sheets and income statement follow.

GOLDEN CORPORATION Comparative Balance Sheets December 31, 2017 and 2016
	2017				2016
Assets
Cash	$	172,000			$	115,800
Accounts receivable		95,000				79,000
Inventory		613,000				534,000
Total current assets		880,000				728,800
Equipment		356,500				307,000
Accum. depreciation—Equipment		(162,000	)			(108,000	)
Total assets	$	1,074,500			$	927,800
Liabilities and Equity
Accounts payable	$	103,000			$	79,000
Income taxes payable		36,000				29,100
Total current liabilities		139,000				108,100
Equity
Common stock, $2 par value		608,000				576,000
Paid-in capital in excess of par value, common stock		204,000				172,000
Retained earnings		123,500				71,700
Total liabilities and equity	$	1,074,500			$	927,800

  

GOLDEN CORPORATION Income Statement For Year Ended December 31, 2017
Sales				$	1,832,000
Cost of goods sold					1,094,000
Gross profit					738,000
Operating expenses
Depreciation expense	$	54,000
Other expenses		502,000			556,000
Income before taxes					182,000
Income taxes expense					33,200
Net income				$	148,800

Problem 12-6A Indirect: Statement of cash flows LO P1, P2, P3

Additional Information on Year 2017 Transactions

Purchased equipment for $49,500 cash.

Issued 12,800 shares of common stock for $5 cash per share.

Declared and paid $97,000 in cash dividends.

Required:
Prepare a complete statement of cash flows; report its cash inflows and cash outflows from operating activities according to the indirect method. (Amounts to be deducted should be indicated with a minus sign.)
  

	GOLDEN CORPORATION Statement of Cash Flows For Year Ended December 31, 2017 Cash flows from operating activities Adjustments to reconcile net income to net cash provided by operations: $0 Cash flows from investing activities: 0 Cash flows from financing activities: 0 Net increase (decrease) in cash $0 Cash balance at beginning of year Cash balance at end of year $0

Answer 1