Question

IKIBAN INC. Comparative Balance Sheets June 30, 2017 and 2016 2017 2016 Assets 96,700 92,000 81,800 6,200 276,700 Cash 62,000 69,000 113,500 9,000 Accounts receivable, net Inventory Prepaid expenses Total current assets Equipment Accum. depreciation-Equipment 253,500 133,000 (18,000) $368,500 142,000 (36,000) $382,700 Total assets Liabilities and Equity Accounts payable Wages payable Income taxes payable Total current liabilities Notes payable (long term) 43,000 7,800 5,200 56,000 48,000 104,000 57,000 18,600 7,400 83,000 78,000 Total liabilities 161,000 Equity Common stock, $5 par value Retained earnings 256,000 22,700 $382,700 178,000 29,500 Total liabilities and equity $368,500 IKIBAN INC. Income Statement For Year Ended June 30,, 2017 $768,000 429,000 Sales Cost of goods sold Gross profit Operating expenses Depreciation expense 339,000 $76,600 85,000 Other expenses Total operating expenses 161,600 177,400 Other gains (losses ) Gain on sale of equipment 3,800 181,200 45,690 Income before taxes Income taxes expense $135,510 Net income Additional Information a. A $30,000 note payable is retired at its $30,000 carrying (book) value in exchange for cash. b. The only changes affecting retained earnings are net income and cash dividends paid. c. New equipment is acquired for $75,600 cash. d. Received cash for the sale of equipment that had cost $66,600, yielding a $3,800 gain. e. Prepaid Expenses and Wages Payable relate to Other Expenses on the income statement. f. All purchases and sales of inventory are on credit.

Answer 1

$ 135,510 $ S 76,600 (3.800) S 72.800 IKIBAN INC Statement of Cash Flows (Indirect Method) For year Ended June 30,2017 Cash flows from operating activities Net Income Adjustments to reconcile net income to net cash provided by operating activities Income statement items not effecting cash Depreciation Gain on Sale of Equipment Changes in Current operating assets and liabilities Increase in accounts receivables Decrease in Inventory Decrease in Prepaid Expenses Decrease in Accounts payable Decrease in Wages payable Decrease in Income Tax payable Net cash flow From operating activities Cash flows from investing activities: Cash from sale of Equipment Cash used for purchase of equipment Net cash flow from investing activities S $ $ $ S S (23.000) 31,700 2.800 (14,000) (10,800) (2.200 S $ (15,500) 192.810 S S 11.800 (75.600) $ (63.800)

S (142,310) $ (30.000) $ 78,000 Cash flows from Financing activities: Cash paid for dividends Repayment of Notes payable Cash from sale of common stock Net cash flow from financing activities Increase in cash Cash balance at prior year end Cash balance at current year end $ 94,310) $ 34.700 $ 62.000 $ 96,700 Working Notes: Cash from sale of Equipment Gross Value of Equipment Less: Depreciation of sale of Equipment ($76,600+18,000-$36,000)) Net cost of Equipment Add: Gain on sale of Equipment $ S $ $ S 66,600 58.600 8.000 3,800 11.800 Cash paid for dividends Opening balance of Retained earnings Add: Net Income $ $ $ S $ 29,500 135,510 165,010 (22,700) 142,310 Less: closing balance of Retained earnings

Cash Flow on Total Assets Ratio Choose Numerator Choose Denominator =Cash Flow on Total Assets Ratio Cash flow from operating activities Average Total assets =Cash Flow on Total Assets Ratio 192.810 / S 375,600 = 51.33% Notes: Avearge Total assets = ($368,500+$382,700)/2 = $375,600