Can you please check my work IKIBAN INC.Comparative Balance SheetsJune 30, 2019 and 201820192018AssetsCash$ 98,50087,50078,8005,900270,700139,000( 34,500)$ 59,00066,000109,0008,400242,400130,000Accounts receivable, netInventoryPrepaid expensesTotal current assetsEquipmentAccum. depreciation-Equipment(16,500)Total assets$375,200$355,900Liabilities and EquityAccounts payable$ 40,0007,5004,90052,40045,000$ 52,50018,0006,80077,30075,000Wages payableIncome taxes payableTotal current liabilitiesNotes payable (long term)Total liabilities97,400152,300EquityCommon stock, $5 par valueRetained earnings250,00027,800175,00028,600Total liabilities and equity$375,200$355,900IKIBAN INC.Income StatementFor Year Ended June 30, 2019Sales$753,000426,000327,000Cost of goods soldGross profitOperating expensesDepreciation expenseOther expenses$73,60082,000Total operating expenses155,600171,400Other gains (losses)Gain on sale of equipment3,500 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 $72,600 cash.d. Received cash for the sale of equipment that had cost $63,600, yielding a $3,500 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.Required:(1) Prepare a statement of cash flows using the indirect method for the year ended June 30, 2019. (Amounts to be deducted shouldbe indicated with a minus sign.)IKIBAN, INC.Statement of Cash Flows (Indirect Method)For Year Ended June 30, 2019Cash flows from operating activitiesNet income2$129,510Adjustments to reconcile net income to net cash provided by operating activitiesIncome statement items not affecting cashDepreciation expense73,600Gain on sale of plant assets3,500Changes in current operating assets and liabilities(21,000)29,7002,400Increase in accounts receivableDecrease in inventoryDecrease in prepaid expensesDecrease in accounts payable(12,000)|

Answered: a. A $30,000 note payable is retired at…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Can you please check my work

IKIBAN INC.
Comparative Balance Sheets
June 30, 2019 and 2018
2019
2018
Assets
Cash
$ 98,500
87,500
78,800
5,900
270,700
139,000
( 34,500)
$ 59,000
66,000
109,000
8,400
242,400
130,000
Accounts receivable, net
Inventory
Prepaid expenses
Total current assets
Equipment
Accum. depreciation-Equipment
(16,500)
Total assets
$375,200
$355,900
Liabilities and Equity
Accounts payable
$ 40,000
7,500
4,900
52,400
45,000
$ 52,500
18,000
6,800
77,300
75,000
Wages payable
Income taxes payable
Total current liabilities
Notes payable (long term)
Total liabilities
97,400
152,300
Equity
Common stock, $5 par value
Retained earnings
250,000
27,800
175,000
28,600
Total liabilities and equity
$375,200
$355,900
IKIBAN INC.
Income Statement
For Year Ended June 30, 2019
Sales
$753,000
426,000
327,000
Cost of goods sold
Gross profit
Operating expenses
Depreciation expense
Other expenses
$73,600
82,000
Total operating expenses
155,600
171,400
Other gains (losses)
Gain on sale of equipment
3,500

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 $72,600 cash.
d. Received cash for the sale of equipment that had cost $63,600, yielding a $3,500 gain.
e. Prepaid Expenses and Wages Payable relate to Other Expenses on the income statement.
f. All purchases and sales of inventory are on credit.
Required:
(1) Prepare a statement of cash flows using the indirect method for the year ended June 30, 2019. (Amounts to be deducted should
be indicated with a minus sign.)
IKIBAN, INC.
Statement of Cash Flows (Indirect Method)
For Year Ended June 30, 2019
Cash flows from operating activities
Net income
2$
129,510
Adjustments to reconcile net income to net cash provided by operating activities
Income statement items not affecting cash
Depreciation expense
73,600
Gain on sale of plant assets
3,500
Changes in current operating assets and liabilities
(21,000)
29,700
2,400
Increase in accounts receivable
Decrease in inventory
Decrease in prepaid expenses
Decrease in accounts payable
(12,000)|

Expert Solution

Step 1

The cash flows statement provides the movement of cash and cash equivalents. There are different ways the cash flows statement assists users

1. Profit is a measurement stick for business performance, but cash is a king of business, this expression refers to tell about the importance of cash, sufficiency of cash leads to the management decision regarding taking of loan to maintain minimum balance and repayment of loans. And also to calculate free cash flows of the business for smooth flow of business.

2. When there is excess cash in the business, management may take financing decisions like reinvent in business for the growth of the business, buying of new equipment for growing capacity of the business. Investment in other businesses to expand the scope.

3. Income statement alone doesn't tell about some cash flows, but the cash flow statement helps to tell about every cash flow in the business, which helps you to know about where the cash went. Management may take decisions regarding the optimum utilization of resources. Huge cash in business may lead to increase credit facilities to customers and prompt payment to the suppliers.

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