Question

2018 IKIBAN INC. Comparative Balance Sheets June 30, 2019 and 2018 2019 Assets Cash $ 83, 300 Accounts receivable, net 75,500 Inventory 70,800 Prepaid expenses 5, 100 Total current assets 234, 700 Equipment 131,000 Accum. depreciation-Equipment (30,500) Total assets $335, 200 Liabilities and Equity Accounts payable $ 32,000 Wages payable 6,700 Income taxes payable 4,100 Total current liabilities 42,800 Notes payable (long term) 31,400 Total liabilities 74, 200 Equity Common stock, $5 par value 234,000 Retained earnings 27,000 Total liabilities and equity $335,200 $ 51,000 58,000 97,000 6,800 212,800 122,000 (12,500) $322, 300 $ 40, 500 16,400 5, 200 62, 100 67,000 129, 100 167, 000 26, 200 $322,300 < Prey 5 of 8 Next

Answer 1

Solution

Ikiban Inc

Statement of cash flows (indirect method):

Ikiban Inc
Statement of cash flows (Indirect method)
for the year ended June 30, 2019
Cash flows from operating activities:
Net Income		$113,510
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation expense	$65,600
Gain on sale of equipment	($2,700)
increase in accounts receivable	($17,500)
Decrease in inventory	$26,200
Decrease in prepaid expenses	$1,700
Decrease in accounts payable	($8,500)
Decrease in wages payable	($9,700)
Decrease in income tax	($1,100)	$54,000
Cash flow from operating activities		$167,510
Cash flow from investing activities:
Purchase of equipment	($64,600)
Proceeds from sale of equipment	$10,700
Cash flow from investing activities		($53,900)
Cash flow from financing activities:
Issue of common stock	$67,000
Dividends paid	($112,710)
Notes payable retired	($35,600)
Cash flow from financing activities		($81,310)
Excess of cash		$32,300
Beginning cash balance		$51,000
Ending cash balance		$83,300

Computations:

1. Book value of equipment sold and sale proceeds:

Beginning balance of equipment                    $122,000

Add: Purchases                                               $64,600

Total                                                               $186,600

Less: Ending balance                                      ($131,000)

Cost of equipment sold                                               $55,600

2. Depreciation on equipment sold:

Accumulated depreciation – beginning balance        $12,500

Add: Depreciation expense                                        $65,600

Total                                                                           $78,100

Less: ending balance                                                  $30,500

Accumulated balance of equipment sold                   $47,600

Cost of equipment sold                       $55,600

Less: accumulated depreciation         ($47,600)

Book value of equipment sold            $8,000

Gain on sale of equipment                 $2,700

Sales proceeds of equipment              $10,700

3. Cash dividends paid –

Retained earnings – beginning balance $26,200

Add: net income                                 $113,510        

Total                                                   $139,710

Less: ending balance                          $27,000

Cash dividends paid                           $112,710