Question

IKIBAN INC. Comparative Balance Sheets June 30, 2019 and 2018
	2019				2018
Assets
Cash	$	77,300			$	61,000
Accounts receivable, net		90,500				68,000
Inventory		80,800				112,000
Prepaid expenses		6,100				8,800
Total current assets		254,700				249,800
Equipment		141,000				132,000
Accum. depreciation—Equipment		(35,500	)			(17,500	)
Total assets	$	360,200			$	364,300
Liabilities and Equity
Accounts payable	$	42,000			$	55,500
Wages payable		7,700				18,400
Income taxes payable		5,100				7,200
Total current liabilities		54,800				81,100
Notes payable (long term)		33,400				77,000
Total liabilities		88,200				158,100
Equity
Common stock, $5 par value		254,000				177,000
Retained earnings		18,000				29,200
Total liabilities and equity	$	360,200			$	364,300

IKIBAN INC.
Income Statement
For Year Ended June 30, 2019Sales   $763,000 Cost of goods sold    428,000 Gross profit    335,000 Operating expenses      Depreciation expense$75,600    Other expenses 84,000    Total operating expenses    159,600      175,400 Other gains (losses)      Gain on sale of equipment    3,700 Income before taxes    179,100 Income taxes expense    45,590 Net income   $133,510

Additional Information

1. A $43,600 note payable is retired at its $43,600 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 $74,600 cash.
4. Received cash for the sale of equipment that had cost $65,600, yielding a $3,700 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

Ikiban Inc Cashflow Statement Calculation 740,500 Cash flows from from Operating Activities Cash collections from customers Cash payments Cash paid to suppliers for Inventory Cash paid for operating other expenses Cash paid for Income Taxes Total cash payments Net Cash Provided/(Used) by Operating Activities 410,300 92,000 47,690 549,990 190,510 As per below wkgs Cash flows from from Investing Activities Proceeds from sale of equipment Purchase of Equipment Net Cash Provided/(Used) by Investing Activities 11,700 (74,600) (62,900) (43,600) 77,000 (144,710) =254,000-177,000 =18,000-29,200-133,510 Cash flows from from Financing Activities Repayment of Notes Proceeds from issue of common stock Dividends paid Net Cash Provided/(Used) by Financing Activities Net Change in Cash Cash at Beginning of Period Cash at End of Period (111,310) 16,300 61,000 77,300 65,600 Workings Proceeds from sale of equipment Cost of equipment sold Accumulated Depreciation on equipment sold Opening Balance Depreciation expense Less Ending Balance Accumulated Depreciation on equipment sold Book Value of equipment sold Gain on sale of equipment Proceeds from sale of equipment 17,500 75,600 (35,500) 57,600 8,000 3,700 11,700

Workings Cashflow Statement - Direct method Cash flows from from Operating Activities Sales Opening Accounts Receivable Closing Accounts Receivable Cash collections from customers 763,000 68,000 (90,500) 740,500 Cash payments Cost of sales Opening Accounts Payable Closing Accounts Payable Closing Inventory Opening Inventory Cash paid to Suppliers 428,000 55,500 (42,000) 80,800 (112,000) 410,300 Operating other expenses Opening Wages Payable Closing Wages Payable Closing Prepaid Expenses Opening Prepaid Expenses Cash paid for operating other expenses 84,000 18,400 (7,700) 6,100 (8,800) 92,000 Income tax expenses Opening Income tax Payable Closing Income tax Payable Cash paid for income taxes 45,590 7,200 (5,100) 47,690 Total Cash Payments Net Cash Provided/(Used) by Operating Activities 549,990 190,510