The following financial statements and additional information are reported. IKIBAN INCORPORATED Comparative Balance Sheets At June 30 2021 2020 Assets Cash $ 87,500 $ 44,000 Accounts receivable, net 65,000 51,000 Inventory 63,800 86,500 Prepaid expenses 4,400 5,400 Total current assets 220,700 186,900 Equipment 124,000 115,000 Accumulated depreciation—Equipment (27,000) (9,000) Total assets $ 317,700 $ 292,900 Liabilities and Equity Accounts payable $ 25,000 $ 30,000 Wages payable 6,000 15,000 Income taxes payable 3,400 3,800 Total current liabilities 34,400 48,800 Notes payable (long term) 30,000 60,000 Total liabilities 64,400 108,800 Equity Common stock, $5 par value 220,000 160,000 Retained earnings 33,300 24,100 Total liabilities and equity $ 317,700 $ 292,900 IKIBAN INCORPORATED Income Statement For Year Ended June 30, 2021 Sales $ 678,000 Cost of goods sold 411,000 Gross profit 267,000 Operating expenses (excluding depreciation) 67,000 Depreciation expense 58,600 141,400 Other gains (losses) Gain on sale of equipment 2,000 Income before taxes 143,400 Income taxes expense 43,890 Net income $ 99,510 Additional Information A $30,000 note 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 $57,600 cash. Received cash for the sale of equipment that had cost $48,600, yielding a $2,000 gain. Prepaid Expenses and Wages Payable relate to Operating Expenses on the income statement. 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, 2021. Note: Amounts to be deducted should be indicated with a minus sign.

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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Question

The following financial statements and additional information are reported.

IKIBAN INCORPORATED
Comparative Balance Sheets
At June 30	2021	2020
Assets
Cash	$ 87,500	$ 44,000
Accounts receivable, net	65,000	51,000
Inventory	63,800	86,500
Prepaid expenses	4,400	5,400
Total current assets	220,700	186,900
Equipment	124,000	115,000
Accumulated depreciation—Equipment	(27,000)	(9,000)
Total assets	$ 317,700	$ 292,900
Liabilities and Equity
Accounts payable	$ 25,000	$ 30,000
Wages payable	6,000	15,000
Income taxes payable	3,400	3,800
Total current liabilities	34,400	48,800
Notes payable (long term)	30,000	60,000
Total liabilities	64,400	108,800
Equity
Common stock, $5 par value	220,000	160,000
Retained earnings	33,300	24,100
Total liabilities and equity	$ 317,700	$ 292,900

IKIBAN INCORPORATED
Income Statement
For Year Ended June 30, 2021
Sales	$ 678,000
Cost of goods sold	411,000
Gross profit	267,000
Operating expenses (excluding depreciation)	67,000
Depreciation expense	58,600
	141,400
Other gains (losses)
Gain on sale of equipment	2,000
Income before taxes	143,400
Income taxes expense	43,890
Net income	$ 99,510

Additional Information

A $30,000 note 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 $57,600 cash.
Received cash for the sale of equipment that had cost $48,600, yielding a $2,000 gain.
Prepaid Expenses and Wages Payable relate to Operating Expenses on the income statement.
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, 2021.

Note: Amounts to be deducted should be indicated with a minus sign.

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