Requlred Informetlon The following information applies to the questions displaye

Question

Requlred Informetlon The following information applies to the questions displayed below The following financial statements and additional information are reported. IKBAN INC Comparative Balance Sheets June 38, 2817 and 2816 2817 2816 Assets Accounts receivable, net Inventory Prepaid expenses Total current assets Equipment Accum. depreciation-Equipment Total assets $182,70e 52,88e 59,888 98,588 7,88e 216, 58e 123,88e 77,888 71,88e 256, 788 132,88e $357,78e $326,58e Liabilities and Equity Accounts payable Wages payable Income taxes payable Total current liabilities Notes payable (long term) Total liabilities Equity Common stock, $5 par value Retained earnings $33,83e 42,e8e 16,688 5,488 64,88e 6,888 4,288 44,888 236,880 39,788 168,88e Total liabilities and equity $357,78e $326,58e IKIBAN INC Income Statement For Year Ended June 38, 2817 Sales Cost of goods sold Gross profit Operating expenses $718,886 299,88e Depreciation expense $66,680 Other expenses Total operating expenses 141,68e 157,480 Other gains (losses) Gain on sale of equipment Income before taxes Income taxes expense Net income 2,88e 168,28e 44,698 $115,516 Additional Information 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 $65,600 cash. d. Received cash for the sale of equipment that had cost $56,600, yielding a $2,800 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.

Explanation / Answer

Statement of cash Flows Cash flow from operating activities Net income for the year 115,510 Adjustments to reconcile net income to net cash provided by operating activities Depreciation expense 66,600 Gain on sale of Equipment -2,800 Changes in current operating assets and liabilities increase in accounts receivable -18000 Decrease in inventory 26700 Decrease in prepaid expense 1800 Decrease in accounts payable -9000 Decrease in wages payable -9800 Decrease in income taxes payable -1200 net cash provided by operating activities 169,810 Cash flow from investing activities purchase of Equipment -65600 Cash received from sale of Equipment 10,800 net cash used by investing activities -54,800 Cash flow from financing activities cash paid for notes payable -30,000 Cash from stock issue 68000 cash dividend -102,310 Net cash used by investing activities -64,310 net increase in cash 50,700 Cash at the beginning of the year 52,000 cash at year end 102,700 Working notes: cash received from sale of equipment cost of Equipment 56,600 Accumulated dep 48,600 Book value 8,000 Add:Gain on sale 2,800 cash received from sale of equipment 10,800 Accumulated depreciation on sold Equipment opening bal 13,000 add depreciation expense for year 66,600 total 79,600 less closing balance -31,000 Accumulated depreciation on sold Equipment 48,600

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