Exercise 12-11 Indirect: Preparing statement of cash flows LO
P1, P2, P3, A1
The following financial statements and additional information
are reported.
IKIBAN INC. Comparative Balance Sheets June 30, 2017 and 2016 |
||||||||
2017 | 2016 | |||||||
Assets | ||||||||
Cash | $ | 104,500 | $ | 49,000 | ||||
Accounts receivable, net | 72,500 | 56,000 | ||||||
Inventory | 68,800 | 94,000 | ||||||
Prepaid expenses | 4,900 | 6,400 | ||||||
Total current assets | 250,700 | 205,400 | ||||||
Equipment | 129,000 | 120,000 | ||||||
Accum. depreciation—Equipment | (29,500 | ) | (11,500 | ) | ||||
Total assets | $ | 350,200 | $ | 313,900 | ||||
Liabilities and Equity | ||||||||
Accounts payable | $ | 30,000 | $ | 37,500 | ||||
Wages payable | 6,500 | 16,000 | ||||||
Income taxes payable | 3,900 | 4,800 | ||||||
Total current liabilities | 40,400 | 58,300 | ||||||
Notes payable (long term) | 35,000 | 65,000 | ||||||
Total liabilities | 75,400 | 123,300 | ||||||
Equity | ||||||||
Common stock, $5 par value | 230,000 | 165,000 | ||||||
Retained earnings | 44,800 | 25,600 | ||||||
Total liabilities and equity | $ | 350,200 | $ | 313,900 | ||||
IKIBAN INC. Income Statement For Year Ended June 30, 2017 |
||||||
Sales | $ | 703,000 | ||||
Cost of goods sold | 416,000 | |||||
Gross profit | 287,000 | |||||
Operating expenses | ||||||
Depreciation expense | $ | 63,600 | ||||
Other expenses | 72,000 | |||||
Total operating expenses | 135,600 | |||||
151,400 | ||||||
Other gains (losses) | ||||||
Gain on sale of equipment | 2,500 | |||||
Income before taxes | 153,900 | |||||
Income taxes expense | 44,390 | |||||
Net income | $ | 109,510 | ||||
Additional Information
Solution
IKIBAN INC. | ||
Statement of Cash Flows | ||
For the Year ended June 30th 2017 | ||
A. Cash Flows from Operating Activity | ||
Net Income | $ 109,510.00 | |
Adjustments to reconcile net income to net cash flows from Operating Activities | ||
Income statement items not affecting cash | ||
Depreciation expense | $ 63,600.00 | |
Gain on sale of Equipment | $ (2,500.00) | |
Cahnges In Current Operating Assets Liabilities | ||
Increase in Accounts Receivable | $ (16,500.00) | |
Decrease in Inventory | $ 25,200.00 | |
Decrease in Prepaid Expenses | $ 1,500.00 | |
Decrease in Accounts Payable | $ (7,500.00) | |
Decrease in Wages Payable | $ (9,500.00) | |
Decrease in Income taxes payable | $ (900.00) | |
$ 53,400.00 | ||
Net cash flow from Operating activities | $ 162,910.00 | |
B. Cash flows from Investing Activities | ||
Cash paid for Equipment | $ (62,600.00) | |
Cash received from Sale Of Equipment | $ 10,500.00 | |
Net Cash Used in Investing activities | $ (52,100.00) | |
C. Cash Flows from Financing activities | ||
Cash paid to retire notes | $ (30,000.00) | |
Cash received from stock issuance | $ 65,000.00 | |
Cash paid for Dividends | $ (90,310.00) | |
Cash flows from Financing activities | $ (55,310.00) | |
Net Increase (Decrease) in Cash [A+B+C] | $ 55,500.00 | |
Cash balance at prior Year-end | $ 49,000.00 | |
Cash balance at Current Year-end | $ 104,500.00 |
.
Cash flow on total assets ratio | ||||
Operating Cash flow | / | Average Total Assets | = | Cash flow on total assets ratio |
$ 162,910.00 | $ 332,050.00 | = | 0.49 |
Working
Accumulated depreciation on equipment sold | |
Accumulated Depreciation beginning balance | $ 11,500.00 |
Add: Depreciation of current year | $ 63,600.00 |
Subtotal | $ 75,100.00 |
Ending balance of Accumulated depreciation | $ 29,500.00 |
Depreciation on asset sold | $ 45,600.00 |
.
Cash received on sale of Equipment | |
Cost of equipment sold | $ 53,600.00 |
Less: Accumulated depreciation | $ 45,600.00 |
Book value of asset sold | $ 8,000.00 |
Profit on sale | $ 2,500.00 |
Cash received on sale of equipment | $ 10,500.00 |
.
Calculation of dividend paid | |
Beginning balance of retained earnings | $ 25,600.00 |
Add: Net income | $ 109,510.00 |
$ 135,110.00 | |
Less: Ending balance of Retained earnings | $ 44,800.00 |
Dividends paid in cash | $ 90,310.00 |
Exercise 12-11 Indirect: Preparing statement of cash flows LO P1, P2, P3, A1 The following financial...
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