Question

Required information Exercise 12-11 Indirect: Preparing statement of cash flows LO P2, P3, A1 [The following information applies to the questions displayed below.] The following financial statements and additional information are reported. IKIBAN INC. Comparative Balance Sheets June 30, 2019 and 2018 2019 2018 $ 50,000 57,000 95,500 6,600 209,100 121,000 (12,000) $318,100 Assets Cash $103,900 Accounts receivable, net 74,000 Inventory 69,800 Prepaid expenses 5,000 Total current assets 252,700 Equipment 130,000 Accum. depreciation- (30,000) Equipment Total assets $352,700 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 $352,700 equity $ 39,000 16,200 5,000 60,200 66,000 126, 200 166,000 25,900 $318,100 IKIBAN INC. Income Statement For Year Ended June 30, 2019 Sales $ 708,000 Cost of goods sold 417,000 Gross profit 291,000 Operating expenses Depreciation $64,600 expense Other expenses 73,000 Total operating 137,600 expenses 153,400 Other gains (losses) Gain on sale of 2,600 equipment Income before taxes 156,000 Income taxes 44,490 expense Net income $111,510 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 $63,600 cash. d. Received cash for the sale of equipment that had cost $54,600, yielding a $2,600 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.

Can anyone please help fill in the remaining blanks. Thank you so much.

Answer 1

IKIBAN, INC.
Statement of Cash Flows (Indirect Method)
For Year Ended June 30, 2019
Cash flows from operating activities
Net income	$111,510
Adjustments to reconcile net income to net cash provided by operating activities
Income statement items not affecting cash
Depreciation expense	64,600
Gain on sale of plant assets	-2,600
Changes in current operating assets and liabilities
Increase in accounts receivable	-17,000
Decrease in inventory	25,700
Decrease in prepaid expenses	1,600
Decrease in accounts payable	-8,000
Decrease in wages payable	-9,600
Decrease in income taxes payable	-1000
Net cash provided by operating activities		165,210
Cash flows from investing activities
Cash paid for equipment	-63,600
Cash received from sale of equipment	10,600
Net cash used in investing activities		-53000
Cash flows from financing activities
Cash paid to retire notes	-30,000
Cash received from stock issuance	66,000
Cash paid for dividends	-94,310
Net cash used in financing activities		-58310
Net increase (decrease) in cash		53900
Cash balance at prior year-end		50,000
Cash balance at current year-end		103900
2
Cash Flow on Total Assets Ratio
Choose Numerator:	Choose Denominator:	Cash Flow on Total Assets Ratio
Operating cash flows	Average total assets	Cash Flow on Total Assets Ratio
165210	335400	49.3%
Workings:
Cash received from sale of equipment:
Cost of Equipment sold	54600
Less: Accumulated depreciation on Equipment	46600	=12000+64600-30000
Book value of Equipment	8000
Add: Gain on sale of Equipment	2600
Cash received from sale of equipment	10600