Exercise 16-11 Indirect: Preparing statement of cash flows LO P1, P2, P3, A1
[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 | |||||||
| Assets | ||||||||
| Cash | $ | 93,700 | $ | 67,000 | ||||
| Accounts receivable, net | 99,500 | 74,000 | ||||||
| Inventory | 86,800 | 121,000 | ||||||
| Prepaid expenses | 6,700 | 10,000 | ||||||
| Total current assets | 286,700 | 272,000 | ||||||
| Equipment | 147,000 | 138,000 | ||||||
| Accum. depreciationEquipment | (38,500 | ) | (20,500 | ) | ||||
| Total assets | $ | 395,200 | $ | 389,500 | ||||
| Liabilities and Equity | ||||||||
| Accounts payable | $ | 48,000 | $ | 64,500 | ||||
| Wages payable | 8,300 | 19,600 | ||||||
| Income taxes payable | 5,700 | 8,400 | ||||||
| Total current liabilities | 62,000 | 92,500 | ||||||
| Notes payable (long term) | 53,000 | 83,000 | ||||||
| Total liabilities | 115,000 | 175,500 | ||||||
| Equity | ||||||||
| Common stock, $5 par value | 266,000 | 183,000 | ||||||
| Retained earnings | 14,200 | 31,000 | ||||||
| Total liabilities and equity | $ | 395,200 | $ | 389,500 | ||||
| IKIBAN INC. Income Statement For Year Ended June 30, 2017 | ||||||
| Sales | $ | 793,000 | ||||
| Cost of goods sold | 434,000 | |||||
| Gross profit | 359,000 | |||||
| Operating expenses | ||||||
| Depreciation expense | $ | 81,600 | ||||
| Other expenses | 90,000 | |||||
| Total operating expenses | 171,600 | |||||
| 187,400 | ||||||
| Other gains (losses) | ||||||
| Gain on sale of equipment | 4,300 | |||||
| Income before taxes | 191,700 | |||||
| Income taxes expense | 46,190 | |||||
| Net income | $ | 145,510 | ||||
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 $80,600 cash.
- Received cash for the sale of equipment that had cost $71,600, yielding a $4,300 gain.
- Prepaid Expenses and Wages Payable relate to Other Expenses on the income statement.
- All purchases and sales of inventory are on credit.
- Prepare a statement of cash flows for the year ended June 30, 2017, using the indirect method. (Amounts to be deducted should be indicated with a minus sign.)
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IKIBAN, INC. Statement of Cash Flows (Indirect Method) For Year Ended June 30, 2017 Cash flows from operating activities Adjustments to reconcile net income to net cash provided by operating activities Income statement items not affecting cash Changes in current operating assets and liabilities Cash flows from investing activities Cash flows from financing activities Net increase (decrease) in cash Cash balance at prior year-end Cash balance at current year-end
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