Question

The following financial statements and additional information are reported.

IKIBAN INC. Comparative Balance Sheets June 30, 2019 and 2018
	2019				2018
Assets
Cash	$	74,900			$	65,000
Accounts receivable, net		96,500				72,000
Inventory		84,800				118,000
Prepaid expenses		6,500				9,600
Total current assets		262,700				264,600
Equipment		145,000				136,000
Accum. depreciation—Equipment		(37,500	)			(19,500	)
Total assets	$	370,200			$	381,100
Liabilities and Equity
Accounts payable	$	46,000			$	61,500
Wages payable		8,100				19,200
Income taxes payable		5,500				8,000
Total current liabilities		59,600				88,700
Notes payable (long term)		34,200				81,000
Total liabilities		93,800				169,700
Equity
Common stock, $5 par value		262,000				181,000
Retained earnings		14,400				30,400
Total liabilities and equity	$	370,200			$	381,100

  

IKIBAN INC. Income Statement For Year Ended June 30, 2019
Sales				$	783,000
Cost of goods sold					432,000
Gross profit					351,000
Operating expenses
Depreciation expense	$	79,600
Other expenses		88,000
Total operating expenses					167,600
					183,400
Other gains (losses)
Gain on sale of equipment					4,100
Income before taxes					187,500
Income taxes expense					45,990
Net income				$	141,510

Additional Information

1. A $46,800 note payable is retired at its $46,800 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 $78,600 cash.
4. Received cash for the sale of equipment that had cost $69,600, yielding a $4,100 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.)


IKIBAN, INC. Statement of Cash Flows (Direct Method) For Year Ended June 30, 2019 Cash flows from operating activities Cash flows from investing activities Cash flows from financing activities

Answer 1

$ 1,99,710.00 STATEMENT OF CASH FLOWS Cash flow from Operating Activities Proceeds from sales revenue $ 7,58,500.00 Payments for inventory to creditors $ -4,14,300.00 Payment for Income Taxes $ -48,490.00 Paid for other Expenses $ -96,000.00 New cash inflow from operating activities Cash Flow from Investing Activities Purchase of New Equipment $ -78,600.00 Proceeds from sale of Equipment $ 12,100.00 Net cash outflow from Investing Activities Cash Flow from Financing Activities Issue of Common Stock $ 81,000.00 Paid for Notes Payable $ -46,800.00 Dividend paid $ -1,57,510.00 Net cash outflow from Financing Activities Net Increase (Decrease) in Cash Cash Balance at prior year-end Cash Balance at current year-end $ -66,500.00 $ -1,23,310.00 $ 9,900.00 $ 65,000.00 $ 74,900.00