Question

The following financial statements and additional information are reported.

IKIBAN INC. Comparative Balance Sheets June 30, 2019 and 2018
	2019				2018
Assets
Cash	$	85,100			$	48,000
Accounts receivable, net		71,000				55,000
Inventory		67,800				92,500
Prepaid expenses		4,800				6,200
Total current assets		228,700				201,700
Equipment		128,000				119,000
Accum. depreciation—Equipment		(29,000	)			(11,000	)
Total assets	$	327,700			$	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)		30,800				64,000
Total liabilities		70,000				120,400
Equity
Common stock, $5 par value		228,000				164,000
Retained earnings		29,700				25,300
Total liabilities and equity	$	327,700			$	309,700

  

IKIBAN INC. Income Statement For Year Ended June 30, 2019
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

1. A $33,200 note payable is retired at its $33,200 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 $61,600 cash.
4. Received cash for the sale of equipment that had cost $52,600, yielding a $2,400 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.

Using the direct method, prepare the statement of cash flows for the year ended June 30, 2019. (Amounts to be deducted should be indicated with a minus sign.)

Answer 1