Question

Required information [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, 2017 and 2016 2017 2016 $ 92,500 102,500 88,800 6,900 290, 700 149,000 (39,500) $400,200 $ 69,000 76,000 124,000 10,400 279,400 140,000 (21,500) $397,900 Assets Cash Accounts receivable, net Inventory Prepaid expenses Total current assets Equipment Accum. depreciation-Equipment Total assets Liabilities and Equity Accounts payable Wages payable Income taxes payable Total current liabilities Notes payable (long term) Total liabilities Equity Common stock, $5 par value Retained earnings Total liabilities and equity $ 50,000 8,500 5,900 64,400 55,000 119,400 $ 67,500 20,000 8,800 96,300 85,000 181,300 270,000 10,800 $400,200 185,000 31,600 $397,900

Answer 1

STATEMENT OF CASH FLOWS
Cash flows from operating activities:
Net income		$      1,49,510
Adjustments to reconcile net income to net cash flows from operations:
Income statement items not affecting cash:
Depreciation expenses	$         83,600
Gain on sale of equipment	$          -4,500
Changes in current operating assets and liabilities:
Increase in accounts receivable	$        -26,500
Decrease in inventory	$         35,200
Decrease in prepaid expenses	$            3,500
Decrease in accounts payable	$        -17,500
Decrease in wages payable	$        -11,500
Decrease in income tax payable	$          -2,900	$          59,400
Net cash flow from operating activities		$      2,08,910
Cash flows from investing activities:
Purchase of equipment	$        -82,600
Sale of equipment [See note below]	$         12,500
Net cash flow from investing activities		$        -70,100
Cash flows from financing activities:
Issued notes payable
Repayment of notes payable	$        -30,000
Issue of common stock	$         85,000
Payment of dividends (31600+149510-10800)	$    -1,70,310
Net cash flows from financing activities		$    -1,15,310
Net increase in cash		$          23,500
Cash balance at prior year end		$          69,000
Cash balance at current year end		$          92,500
Note:
Original cost of equipment sold	$         73,600
Accumulated depreciation = 21500+83600-39500 =	$         65,600
Book value	$            8,000
Add: Gain on sale	$            4,500
Proceeds on sale	$         12,500