Exercise 12-12 (Algo) Indirect: Preparing statement of cash flows LO P2, P3, A1 The following financial statements and additional information are reported. IKIBAN INCORPORATED Comparative Balance Sheets At June 30 2021 2020 Assets Cash $ 102,700 $ 52,000 Accounts receivable, net 77,000 59,000 Inventory 71,800 98,500 Prepaid expenses 5,200 7,000 Total current assets 256,700 216,500 Equipment 132,000 123,000 Accumulated depreciation—Equipment (31,000) (13,000) Total assets $ 357,700 $ 326,500 Liabilities and Equity Accounts payable $ 33,000 $ 42,000 Wages payable 6,800 16,600 Income taxes payable 4,200 5,400 Total current liabilities 44,000 64,000 Notes payable (long term) 38,000 68,000 Total liabilities 82,000 132,000 Equity Common stock, $5 par value 236,000 168,000 Retained earnings 39,700 26,500 Total liabilities and equity $ 357,700 $ 326,500 IKIBAN INCORPORATED Income Statement For Year Ended June 30, 2021 Sales $ 718,000 Cost of goods sold 419,000 Gross profit 299,000 Operating expenses (excluding depreciation) 75,000 Depreciation expense 66,600 157,400 Other gains (losses) Gain on sale of equipment 2,800 Income before taxes 160,200 Income taxes expense 44,690 Net income $ 115,510 Additional Information A $30,000 notes payable is retired at its $30,000 carrying (book) value in exchange for cash. The only changes affecting retained earnings are net income and cash dividends paid. New equipment is acquired for $65,600 cash. Received cash for the sale of equipment that had cost $56,600, yielding a $2,800 gain. Prepaid Expenses and Wages Payable relate to Operating Expenses on the income statement. All purchases and sales of inventory are on credit. Exercise 12-12 (Algo) Part 1 Compute the company’s cash flow on total assets ratio for its fiscal year 2021.

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

The following financial statements and additional information are reported.

IKIBAN INCORPORATED
Comparative Balance Sheets
At June 30	2021	2020
Assets
Cash	$ 102,700	$ 52,000
Accounts receivable, net	77,000	59,000
Inventory	71,800	98,500
Prepaid expenses	5,200	7,000
Total current assets	256,700	216,500
Equipment	132,000	123,000
Accumulated depreciation—Equipment	(31,000)	(13,000)
Total assets	$ 357,700	$ 326,500
Liabilities and Equity
Accounts payable	$ 33,000	$ 42,000
Wages payable	6,800	16,600
Income taxes payable	4,200	5,400
Total current liabilities	44,000	64,000
Notes payable (long term)	38,000	68,000
Total liabilities	82,000	132,000
Equity
Common stock, $5 par value	236,000	168,000
Retained earnings	39,700	26,500
Total liabilities and equity	$ 357,700	$ 326,500

IKIBAN INCORPORATED
Income Statement
For Year Ended June 30, 2021
Sales	$ 718,000
Cost of goods sold	419,000
Gross profit	299,000
Operating expenses (excluding depreciation)	75,000
Depreciation expense	66,600
	157,400
Other gains (losses)
Gain on sale of equipment	2,800
Income before taxes	160,200
Income taxes expense	44,690
Net income	$ 115,510

A $30,000 notes payable is retired at its $30,000 carrying (book) value in exchange for cash.
The only changes affecting retained earnings are net income and cash dividends paid.
New equipment is acquired for $65,600 cash.
Received cash for the sale of equipment that had cost $56,600, yielding a $2,800 gain.
Prepaid Expenses and Wages Payable relate to Operating Expenses on the income statement.
All purchases and sales of inventory are on credit.