Question

The following financial statements and additional information are reported. IKIBAN INC Comparative Balance Sheets June 30, 2e17 and 2816 2e17 2016 Assets Cash Accounts receivable, net Inventory Propaid expenses Total current assets Equipment Accum. depreciation-Equipment Total assets s 66,e0e 73,000 119,see 9,800 268,308 137,000 (20,000) $385,308 $ 94,300 98,808 85,800 6,600 284,708 146,808 (38,000) $392,788 Liabilities and Equity Accounts payable Wages payable Income taxes payable Total current liabilities Notes payable (long tere) $ 47,808 8,200 5,608 60,800 52,000 112,800 $63,000 19,400 8,288 98,600 82,000 172,600 Total liabilities Equity Common stock, $5 par value Retained earnings Total liabilities and equity 182,000 30,700 $385,300 264,808 15,900 $392,700 IKIBAN INC. Income Statement For Year Ended June 38, 2817 $788,008 433,000 355,000 Sales Cost of goods sold Gross profit Operating expenses Depreciation expense Other expenses Total operating expenses $80,600 89,000 169,600 185,400 Other gains (losses) Gain on sale of equipment Income before taxes Income taxes expense 4,200 189,600 46,090 $143,518 Net incose Additional information a. A $30,000 note payoble is retired at its $30.000 carrying (book) value in exchange for cash b. The only changes affecting retained earnings are net income and cosh dividends paid c. New equipment is acquired for $79,600 cash. d. Received cash for the sale of equipment thet had cost $70,600, yielding a $4,200 gain e. Prepaid Expenses and Woges Payable relate to Other Expenses on the income statement f. All purchases and soles of inventory are on credit

Answer 1

cash flow statement is prepared to find changes In cash during the period. it is bifurcated into three main categories

(1) cash flow from operating activities(2) cash flow from investing activities (3) cash flow from financing activities

cash flow from operating activities
Net income	$143,510
Adjustments
depreciation expense	$80,600
gain on sale of plant assets	($4,200)
changes in operating asset and liabilities
increase in account receivable [73000-98000]	($25,000)
decrease in inventory [119500-85800]	$33,700
decrease in prepaid expense [9800-6600]	$3,200
decrease in accounts payable [47000-63000]	($16000)
decrease in wages payable[19400-8200]	($11,200)
decrease in income taxes payable [8200-5600]	($2600)
net cash provided by operating activities [143510+80600-4200-25000+33700+3200-16000-11200-2600]		$202,010
cash flow from investing activities
cash received from sale of equipment NOTE 1	$12,200
cash paid for equipment	($79,600)
net cash used in investing activities [79600-12200]		($67,400)
cash flow from financing activities
cash received from stock issuance [182000-264000]	$82,000
cash paid to retire notes	($30,000)
cash paid for dividend NOTE 2	($158,310)
net cash used in financing activities		($106,310)
net increase(decrease) in cash [202010-67400-106310]		$28,300
cash balance at prior year		$66,000
cash balance at current year [28300+66000]		$94,300

(1) cash received from sale of equipment

accumulated depreciation of equipment sold

= accumulated depreciation at beginning+ depreciation for the year- accumulated depreciation at the end

=20000+80600-38000

=62,600$

cost - depreciation = book value

70600-62600=$8000

sale value = book value+ gain

=8000+4200

=12,200$

(2) dividend paid

=retained earning at the beginning+net income for the year - dividend paid = retained earning at the end

=30700+143510-dividend = 15900

=158,310