The following financial statements and additional information
are reported.
IKIBAN INC. Comparative Balance Sheets June 30, 2019 and 2018 |
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2019 | 2018 | |||||||
Assets | ||||||||
Cash | $ | 102,100 | $ | 53,000 | ||||
Accounts receivable, net | 78,500 | 60,000 | ||||||
Inventory | 72,800 | 100,000 | ||||||
Prepaid expenses | 5,300 | 7,200 | ||||||
Total current assets | 258,700 | 220,200 | ||||||
Equipment | 133,000 | 124,000 | ||||||
Accum. depreciation—Equipment | (31,500 | ) | (13,500 | ) | ||||
Total assets | $ | 360,200 | $ | 330,700 | ||||
Liabilities and Equity | ||||||||
Accounts payable | $ | 34,000 | $ | 43,500 | ||||
Wages payable | 6,900 | 16,800 | ||||||
Income taxes payable | 4,300 | 5,600 | ||||||
Total current liabilities | 45,200 | 65,900 | ||||||
Notes payable (long term) | 39,000 | 69,000 | ||||||
Total liabilities | 84,200 | 134,900 | ||||||
Equity | ||||||||
Common stock, $5 par value | 238,000 | 169,000 | ||||||
Retained earnings | 38,000 | 26,800 | ||||||
Total liabilities and equity | $ | 360,200 | $ | 330,700 | ||||
IKIBAN INC. Income Statement For Year Ended June 30, 2019 |
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Sales | $ | 723,000 | ||||
Cost of goods sold | 420,000 | |||||
Gross profit | 303,000 | |||||
Operating expenses | ||||||
Depreciation expense | $ | 67,600 | ||||
Other expenses | 76,000 | |||||
Total operating expenses | 143,600 | |||||
159,400 | ||||||
Other gains (losses) | ||||||
Gain on sale of equipment | 2,900 | |||||
Income before taxes | 162,300 | |||||
Income taxes expense | 44,790 | |||||
Net income | $ | 117,510 | ||||
Additional Information
Required:
(1) Prepare a statement of cash flows using the indirect method for the year ended June 30, 2019. (Amounts to be deducted should be indicated with a minus sign.)
|
(2) Compute the company’s cash flow on total assets ratio for its fiscal year 2019.
|
Solution
IKIBAN INC. | ||
Statement of Cash Flows | ||
For the Year ended June 30th 2017 | ||
A. Cash Flows from Operating Activity | ||
Net Income | $ 117,510.00 | |
Adjustments to reconcile net income to net cash flows from Operating Activities | ||
Income statement items not affecting cash | ||
Depreciation expense | $ 67,600.00 | |
Gain on sale of Equipment | $ (2,900.00) | |
Cahnges In Current Operating Assets Liabilities | ||
Increase in Accounts Receivable | $ (18,500.00) | |
Decrease in Inventory | $ 27,200.00 | |
Decrease in Prepaid Expenses | $ 1,900.00 | |
Decrease in Accounts Payable | $ (9,500.00) | |
Decrease in Wages Payable | $ (9,900.00) | |
Decrease in Income taxes payable | $ (1,300.00) | |
Net cash flow from Operating activities | $ 172,110.00 | |
B. Cash flows from Investing Activities | ||
Cash paid for Equipment | $ (66,600.00) | |
Cash received from Sale Of Equipment | $ 10,900.00 | |
Net Cash Used in Investing activities | $ (55,700.00) | |
C. Cash Flows from Financing activities | ||
Cash paid to retire notes | $ (30,000.00) | |
Cash received from stock issuance | $ 69,000.00 | |
Cash paid for Dividends | $ (106,310.00) | |
Cash flows from Financing activities | $ (67,310.00) | |
Net Increase (Decrease) in Cash [A+B+C] | $ 49,100.00 | |
Cash balance at prior Year-end | $ 53,000.00 | |
Cash balance at Current Year-end | $ 102,100.00 |
.
Cash flow on total assets ratio | ||||
Operating Cash flow | / | Average Total Assets | = | Cash flow on total assets ratio |
$ 172,110.00 | $ 345,450.00 | = | 0.50 |
.
Working
Accumulated depreciation on equipment sold | |
Accumulated Depreciation beginning balance | $ 13,500.00 |
Add: Depreciation of current year | $ 67,600.00 |
Subtotal | $ 81,100.00 |
Ending balance of Accumulated depreciation | $ 31,500.00 |
Depreciation on asset sold | $ 49,600.00 |
.
Cash received on sale of Equipment | |
Cost of equipment sold | $ 57,600.00 |
Less: Accumulated depreciation | $ 49,600.00 |
Book value of asset sold | $ 8,000.00 |
Profit on sale | $ 2,900.00 |
Cash received on sale of equipment | $ 10,900.00 |
.
Calculation of dividend paid | |
Beginning balance of retained earnings | $ 26,800.00 |
Add: Net income | $ 117,510.00 |
$ 144,310.00 | |
Less: Ending balance of Retained earnings | $ 38,000.00 |
Dividends paid in cash | $ 106,310.00 |
The following financial statements and additional information are reported. IKIBAN INC. Comparative Balance Sheets June 30,...
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