Question

Required information (The following information applies to the questions displayed below. The following financial statements and additional information are reported. 2018 IKIBAN INC. Comparative Balance Sheets June 30, 2019 and 2018 2019 Assets Cash $103,900 Accounts receivable, net 74, eee Inventory 69,800 Prepaid expenses 5, eee Total current assets 252,700 Equipment 130,000 Accum. depreciation-Equipment (30, eee) Total assets $352,7ee Liabilities and Equity Accounts payable $ 31,000 Wages payable 6,600 Income taxes payable 4,000 Total current liabilities 41,600 Notes payable (long term) 36,000 Total liabilities 77,600 Equity Common stock, $5 par value 232,000 Retained earnings 43,100 Total liabilities and equity $352,700 $ 50,000 57, eee 95,500 6,600 209,100 121,000 (12,eee) $318,100 $ 39,000 16,200 5,000 60,200 66,000 126,200 166,000 25,900 $318,100

Answer 1

1)

IKIBAN, INC.
Statement of Cash Flows (Indirect Method)
For the Year Ended June 30, 2019
Cash flow from operating activities:
Net income	$111510
Adjustments to reconcile net income to net cash provided by operating activities
Income statement items not affecting cash
Depreciation expense	64600
Gain on sale of plant assets	-2600
Changes in current operating assets and liabilities
Decrease in inventory (69800-95500)	25700
Decrease in prepaid expenses (5000-6600)	1600
Increase in accounts receivable (74000-57000)	-17000
Decrease in accounts payable (31000-39000)	-8000
Decrease in wages payable (6600-16200)	-9600
Decrease in income taxes payable (4000-5000)	-1000
Net cash provided by operating activities		$165210
Cash flows from investing activities:
Sale of equipment	10600
Purchase of equipment	-63600
Net cash used in investing activities		-53000
Cash flows from financing activities:
Issuance of common stock (232000-166000)	66000
Cash paid to retire notes	-30000
Dividends paid	-94310
Net cash used in financing activities		-58310
Net increase (decrease) in cash (165210-53000-58310)		$53900
Cash balance at prior year end		50000
Cash balance at current year end		$103900

Depreciation on the sold equipment= Accumulated depreciation at the beginning of the year+Depreciation expense-Accumulated depreciation at the end of the year

= $12000+64600-30000= $46600

Book value of the equipment at the time of sales= $54600-46600= $8000

Sales price of the equipment= $8000+2600= $10600

Dividend paid= Retained earnings at the beginning of the year+Net income-Retained earning at the end of the year

= $25900+111510-43100= $94310

2)

Cash Flow on Total Assets Ratio
Choose Numerator	/	Choose Denominator	=	Cash Flow on Total Assets Ratio
Cash flow from operations	/	Average total assets	=	Cash Flow on Total Assets Ratio
$165210	/	($352700+318100)/2= $335400		49.3%