Question

2018 IKIBAN INC Comparative Balance Sheets June 30, 2019 and 2018 2019 Assets Cash $ 86,300 Accounts receivable, net 68,000 Inventory 65,800 Prepaid expenses 4.600 Total current assets 224,700 Equipment 126,000 Accum. depreciation-Equipment (28,000) Total assets $322,700 Liabilities and Equity Accounts payable $ 27,000 Wages payable 6,200 Income taxes payable 3,600 Total current liabilities 36,800 Notes payable (long term) 30,400 Total liabilities 67,200 Equity Common stock, $5 par value 224,000 Retained earnings 31,500 Total liabilities and equity $322,700 $ 46,000 53,000 89,500 5,800 194,300 117,000 (10,000) $301,300 $ 33,000 15,400 4,200 52,600 62,000 114,600 162,000 24,700 $301,300 IKIBAN INC. Income Statement For Year Ended June 30, 2019 Sales Cost of goods sold Gross profit Operating expenses Depreciation expense $60,600 Other expenses 69,000 Total operating expenses $688,000 413,000 275,000 129,600 145,400 Other gains (losses) Gain on sale of equipment Income before taxes Income taxes expense Net income 2,200 147,600 44,090 $103,510 Additional Information a. A $31,600 note payable is retired at its $31,600 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 $59,600 cash. d. Received cash for the sale of equipment that had cost $50,600. yielding a $2,200 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. a. A $31,600 note payable is retired at its $31,600 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 $59,600 cash. d. Received cash for the sale of equipment that had cost $50,600, yielding a $2,200 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. Using the direct method, prepare the statement of cash flows for the year ended June 30, 2019. (Amounts to be deducted should be indicated with a minus sign.) IKIBAN, INC. Statement of Cash Flows (Direct Method) For Year Ended June 30, 2019 Cash flows from operating activities Cash flows from investing activities Cash flows from financing activities Net increase (decrease) in cash Cash balance at prior year-end Cash balance at current year-end

Answer 1

IKIBAN, INC. Statement of Cash Flows (Direct Method) For Year Ended June 30, 2019 Cash flows from operating activities: Cash received from customers $ 673,000 Cash paid for merchandise $-395,300 Cash paid for operating expenses $ -77,000 Cash paid for income taxes $ -44,690 Net cash provided by operating activities (A) $ 156,010 Cash flows from investing activities: Cash received from sale of equipment Cash paid for equipment Net cash used in investing activities (B) $ 10,200 $ -59,600 $ -49,400 $ 62,000 $ -31,600 $ -96,710 Cash flows from financing activities: Cash received from stock issuance Cash paid to retire notes Cash paid for dividend Net cash used in financing activities (C) Net increase (decrease) in cash (A+B+C) Add: Cash balance at prior year-end Cash balance at current year-end -66310 $ 40,300 $ 46,000 $ 86,300

Note:

Particulars Sales Add: Beginning accounts receivables Less: Ending accounts receivabels Cash received from customers Amount $ 688,000 $ 53,000 $ -68,000 $ 673,000 Particulars Cost of goods sold Add: Ending inventory Less: Beginning inventory Purchases Add: Beginning accounts payable Less: Ending accounts payable Cash paid for merchandise Amount $ 413,000 $ 65,800 $ -89,500 $ 389,300 $ 33,000 $ 27,000 $ 395,300 Amount $ 69,000 Particulars Other expenses Less: Decrease in prepiad expenses (4,600-5,800) Add: Decrease in wages payable (15,400-6,200) Cash paid for operating expenses $ $ 9,200 77,000

Particulars Income tax expense Add: Decrease in income tax payable (4,200-3,600) Cash paid for income taxes Amount $ 44,090 $ 600 $ 44,690 Particulars Beginning balance of Accumulated depreciation Add: Depreciation expense Less: Ending balance of Accumulated depreciation Accumulated depreciation on equipment sold Amount $ 10,000 $ 60,600 $ -28,000 $ 42,600 Book value of equipment sold = $50,600-42,600 = $8,000 Cash received on sale of equipment = $8,000 + $2,200 = $10,200 Particulars Beginning balance of retained earnings Add: Net income Less: Ending balance of retained earnings Cash paid for dividend Amount $ 24,700 $ 103,510 $ -31,500 $ 96,710