Question

The following financial statements and additional information are reported. 2017 IKIBAN INC. Comparative Balance Sheets June 30, 2018 and 2017 2018 Assets Cash $ 87,500 Accounts receivable, net 65,000 Inventory 63,800 Prepaid expenses 4,400 Total current assets 220,700 Equipment 124,000 Accum. depreciation-Equipment (27,000) Total assets $317,700 Liabilities and Equity Accounts payable $ 25,000 Wages payable 6,000 Income taxes payable 3,400 Total current liabilities 34,400 Notes payable (long term) 30,000 Total liabilities 64,400 Equity Common stock, $5 par value 220,000 Retained earnings 33,300 Total liabilities and equity $317,700 $ 44,000 51,000 86,500 5,400 186,900 115,000 (9,000) $292,900 $ 30,000 15,000 3,800 48,800 60,000 108,800 160,000 24,100 $292,900

Answer 1

Solution

Cash flow on total assets ratio
Operating Cash flow	/	Average Total Assets	=	Cash flow on total assets ratio
$ 1,51,410.00	/	$    3,05,300.00*	=	0.50

*(317700+292900)/2

Working

IKIBAN INC.
Statement of Cash Flows
Operating section
A. Cash Flows from Operating Activity
Net Income		$      99,510.00
Adjustments to reconcile net income to net cash flows from Operating Activities
Income statement items not affecting cash
Depreciation expense	$           58,600.00
Gain on sale of Equipment	$           (2,000.00)
Changes In Current Operating Assets Liabilities
Increase in Accounts Receivable	$        (14,000.00)
Decrease in Inventory	$           22,700.00
Decrease in Prepaid Expenses	$             1,000.00
Decrease in Accounts Payable	$           (5,000.00)
Decrease in Wages Payable	$           (9,000.00)
Decrease in Income taxes payable	$              (400.00)
		$      51,900.00
Net cash flow from Operating activities		$   1,51,410.00