Question

IKIBAN INC. Comparative Balance Sheets June 30, 2017 and 2016
	2017				2016
Assets
Cash	$	97,300			$	61,000
Accounts receivable, net		90,500				68,000
Inventory		80,800				112,000
Prepaid expenses		6,100				8,800
Total current assets		274,700				249,800
Equipment		141,000				132,000
Accum. depreciation—Equipment		(35,500	)			(17,500	)
Total assets	$	380,200			$	364,300
Liabilities and Equity
Accounts payable	$	42,000			$	55,500
Wages payable		7,700				18,400
Income taxes payable		5,100				7,200
Total current liabilities		54,800				81,100
Notes payable (long term)		47,000				77,000
Total liabilities		101,800				158,100
Equity
Common stock, $5 par value		254,000				177,000
Retained earnings		24,400				29,200
Total liabilities and equity	$	380,200			$	364,300

  

IKIBAN INC. Income Statement For Year Ended June 30, 2017
Sales				$	763,000
Cost of goods sold					428,000
Gross profit					335,000
Operating expenses
Depreciation expense	$	75,600
Other expenses		84,000
Total operating expenses					159,600
					175,400
Other gains (losses)
Gain on sale of equipment					3,700
Income before taxes					179,100
Income taxes expense					45,590
Net income				$	133,510

Additional Information

1. A $30,000 note payable is retired at its $30,000 carrying (book) value in exchange for cash.
2. The only changes affecting retained earnings are net income and cash dividends paid.
3. New equipment is acquired for $74,600 cash.
4. Received cash for the sale of equipment that had cost $65,600, yielding a $3,700 gain.
5. Prepaid Expenses and Wages Payable relate to Other Expenses on the income statement.
6. All purchases and sales of inventory are on credit.

Answer 1

Statement of cash flow

Cash flow from operating activities
Net income		133510
Adjustment to reconcile net income to net cash flow from operating activities
Depreciation expense	75600
Gain on sale of equipment	-3700
Increase account receivable	-22500
Decrease inventories	31200
Decrease prepaid expense	2700
Decrease account payable	-13500
Decrease wages payable	-10700
Decrease income tax payable	-2100
		57000
Net cash flow from operating activities		190510
Cash flow from investing activities
New equipment purchase	-74600
Cash received from sale of equipment	11700
Net cash used in investing activities		-62900
Cash flow from financing activities
Notes payable repaid	-30000
Issue common Stock	77000
Dividend paid	-138310
Net cash used in financing activities		-91310
Net cash increase (decrease)		36300
Beginning cash		61000
Ending Cash		97300