Question

2016 IKIBAN INC. Comparative Balance Sheets June 30, 2017 and 2016 2017 Assets Cash $ 97,900 Accounts receivable, net 89,000 Inventory 79, 800 Prepaid expenses 6,000 Total current assets 272,700 Equipment 140,000 Accum. depreciation-Equipment (35,000) Total assets $377,700 Liabilities and Equity Accounts payable $ 41,000 Wages payable 7,600 Income taxes payable 5,000 Total current liabilities 53,600 Notes payable (long term) 46,000 Total liabilities 99,600 Equity Common stock, $5 par value 252,000 Retained earnings 26,100 Total liabilities and equity $377, 700 $ 60,000 67,000 110,500 8,600 246,100 131,000 (17,000) $360, 100 $ 54,000 18,200 7,000 79,200 76,000 155, 200 176,000 28,900 $360, 100 IKIBAN INC. Income Statement For Year Ended June 30, 2017 Sales Cost of goods sold Gross profit Operating expenses Depreciation expense $74,600 Other expenses 83,000 Total operating expenses $758,000 427,000 331,000 157,600 173,400 Other gains (losses) Gain on sale of equipment Income before taxes Income taxes expense Net income 3,600 177,000 45,490 $131,510

Answer 1

Solution

IKIBAN INC.
Statement of Cash Flows
For the Year ended June 30th 2017
A. Cash Flows from Operating Activity
Net Income		$    131,510.00
Adjustments to reconcile net income to net cash flows from Operating Activities
Income statement items not affecting cash
Depreciation expense	$           74,600.00
Gain on sale of Equipment	$           (3,600.00)
Cahnges In Current Operating Assets Liabilities
Increase in Accounts Receivable	$        (22,000.00)
Decrease in Inventory	$           30,700.00
Decrease in Prepaid Expenses	$             2,600.00
Decrease in Accounts Payable	$        (13,000.00)
Decrease in Wages Payable	$        (10,600.00)
Decrease in Income taxes payable	$           (2,000.00)
		$      56,700.00
Net cash flow from Operating activities		$    188,210.00
B. Cash flows from Investing Activities
Cash paid for Equipment	$        (73,600.00)
Cash received from Sale Of Equipment	$           11,600.00
Net Cash Used in Investing activities		$    (62,000.00)
C. Cash Flows from Financing activities
Cash paid to retire notes	$        (30,000.00)
Cash received from stock issuance	$           76,000.00
Cash paid for Dividends	$      (134,310.00)
Cash flows from Financing activities		$    (88,310.00)
Net Increase (Decrease) in Cash [A+B+C]		$      37,900.00
Cash balance at prior Year-end		$      60,000.00
Cash balance at Current Year-end		$      97,900.00

Working

Accumulated depreciation on equipment sold
Accumulated Depreciation beginning balance	$       17,000.00
Add: Depreciation of current year	$       74,600.00
Subtotal	$       91,600.00
Ending balance of Accumulated depreciation	$       35,000.00
Depreciation on asset sold	$    (56,600.00)

.

Cash received on sale of Equipment
Cost of equipment sold	$       64,600.00
Less: Accumulated depreciation	$    (56,600.00)
Book value of asset sold	$         8,000.00
Profit on sale	$         3,600.00
Cash received on sale of equipment	$       11,600.00

.

Calculation of dividend paid
Beginning balance of retained earnings	$       28,900.00
Add: Net income	$    131,510.00
	$    160,410.00
Less: Ending balance of Retained earnings	$       26,100.00
Dividends paid in cash	$    134,310.00