Question

Required information Exercise 12-11 Indirect: Preparing statement of cash flows LO P2, P3, A1 [The following information applies to the questions displayed below.] The following financial statements and additional information are reported. 2018 IKIBAN INC. Comparative Balance Sheets June 30, 2019 and 2018 2019 Assets Cash $100,300 Accounts receivable, net 83,000 Inventory 75,800 Prepaid expenses Total current assets 264, 700 Equipment 136,000 Accum. depreciation Equipment (33.000) Total assets $367,700 Liabilities and Equity Accounts payable 37,000 Wages payable 7,200 Income taxes payable 4,600 Total current liabilities 48,800 42,000 Notes payable long term) Total liabilities 90,800 Equity Common stock, $5 par value 244.000 Retained earnings 32,900 367, 700 Total liabilities and equity 56,000 63,000 104,500 7,800 231,300 127,000 (15,000). $343,300 $48.000 17,400 6.200 71,600 72,000 143,600 172,000 27,700 $343,300 IKIBAN INC. Income Statement For Year Ended June 30, 2019 $738,000 2012 Next >

Answer 1

Solution 1:

IKIBAN Inc.
Statement of Cash Flows (Partial)
For year ended 2019
Particulars	Details	Amount
Cash Flow from Operating Activities:
Net Income	$123,510.00
Adjustments to reconcile net income to net cash provided by operations:
Depreciation Expense	$70,600.00
Gain on sale of equipment	-$3,200.00
Increase in accounts receivables ($83,000 - $63,000)	-$20,000.00
Decrease in inventory ($104,500 - $75,800)	$28,700.00
Decrease in prepaid expenses ($7,800 - $5,600)	$2,200.00
Decrease in accounts payable ($48,000 - $37,000)	-$11,000.00
Decrease in wages payable ($17,400 - $7,200)	-$10,200.00
Decrease in income tax payable ($6,200 - $4,600)	-$1,600.00
Net Cash provided by operating activities		$179,010.00
Cash Flow from Investing Activities:
Purchase of equipment	-$69,600.00
Sale of equipment ($60,600 - $52,600 + 3,200)	$11,200.00
Net Cash used in Investing activities		-$58,400.00
Cash Flow from Financing Activities:
Proceed from issue of common stock ($244,000 - $172,000)	$72,000.00
Dividend Paid ($27,700 + $123,510 - $32,900)	-$118,310.00
Payment for retirement of note	-$30,000.00
Net Cash Provided by financing activities		-$76,310.00
Net Increase / (Decrease) in Cash		$44,300.00
Cash balance at beginning of year		$56,000.00
Cash balance at end of year		$100,300.00

Solution 2:

Cash flow on Total Assets ratio
Choose Numerator	/	Choose Denominator	=	Cash flow on Total Assets ratio
Cash flow from operations	/	Average Total Assets	=	Cash flow on Total Assets ratio
$179,010.00	/	$355,500.00	=	0.50