9 [The following information applies to the questions displayed below] The follo
ID: 2397681 • Letter: 9
Question
9 [The following information applies to the questions displayed below] The following financial statements and additional information are reported. ÍK?BAN INC. Comparative Balance Sheets June 30, 2017 and 2016 Pert 1 of 2 ' 2017 2016 Assets Cash Accounts receivable, net Inventory Prepaid expenses Total current assets Equipment Accum. depreciation-Equipment Total assets 5.88 points 87,500 $ 44,0e0 63,8001,e00 86,500 4,4085,400 65,000 220,700 124,000 186,908 115,000 27,009) (9,eee $317,700 $292,900 eBook 9,800) Hint 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 Total liabilities and equity Print $ 25,000 30,000 15,000 3,800 48,800 30,0086,080 64,400108,800 6,000 3,400 34,400 References 220,00 160,000 33,30024,100 $317,700 $292,900Explanation / Answer
Answer:
1
IKIBAN, INC.
Statement of Cash Flows (Indirect Method)
For Year Ended June 30, 2017
Cash flows from operating activities
Net income
99510
Adjustments to reconcile net income to net cash provided by operating activities
Increase in accounts receivable (51000-65000)
-14000
Decrease in merchandise inventory (86500-63000)
22700
Decrease in prepaid expenses (4400-5400)
1000
Decrease in accounts payable (25000-30000)
-5000
Decrease in wages payable ( 6000-15000)
-9000
Decrease in income taxes payables ( 3400-3800))
-400
Depreciation expense
58600
Gain on sale of plant assets
-2000
Net cash provided by operating activities
151410
Cash flows from investing activities
Cash received from sale of equip. (Note 1)
10000
Cash paid for equipment (Note 1—given)
-57600
Net cash used in investing activities
-47600
Cash flows from financing activities
Cash received from stock issuance
60000
Cash paid to retire notes (Note 2—given)
-30000
Cash paid for dividends (Note 3)
-90310
Net cash used in financing activities
-60310
Net increase in cash
43500
Cash balance at prior year-end
44000
Cash balance at current year-end
87500
Working notes for the above answer is as under
1
Cost of equipment sold (Given)
$48,600
Accumulated depreciation of equipment sold*
-40,600
Book value of equipment sold
8,000
Gain on sale of equipment (Given)
2,000
Cash receipt from sale of equipment
$10,000
Cost of equipment sold
$48,600
Plus net increase in the equipment account balance
9,000
Cash paid for new equipment (given)
$57,600
2
Equipment
Bal., 6/30/2016
115,000
Purchase
57,600
Sale 48,600
Bal., 6/30/2017
124,000
Accumulated Depreciation, Equipment
Bal., 6/30/2016
9,000
Sale (plug) *40,600
Depr. Expense
58,600
Bal., 6/30/2017
27,000
3
Retained Earnings
Bal., 6/30/2016
24,100
Dividends (plug)
90,310
Net income
99,510
Bal., 6/30/2017
33,300
IKIBAN, INC.
Statement of Cash Flows (Indirect Method)
For Year Ended June 30, 2017
Cash flows from operating activities
Net income
99510
Adjustments to reconcile net income to net cash provided by operating activities
Increase in accounts receivable (51000-65000)
-14000
Decrease in merchandise inventory (86500-63000)
22700
Decrease in prepaid expenses (4400-5400)
1000
Decrease in accounts payable (25000-30000)
-5000
Decrease in wages payable ( 6000-15000)
-9000
Decrease in income taxes payables ( 3400-3800))
-400
Depreciation expense
58600
Gain on sale of plant assets
-2000
Net cash provided by operating activities
151410
Cash flows from investing activities
Cash received from sale of equip. (Note 1)
10000
Cash paid for equipment (Note 1—given)
-57600
Net cash used in investing activities
-47600
Cash flows from financing activities
Cash received from stock issuance
60000
Cash paid to retire notes (Note 2—given)
-30000
Cash paid for dividends (Note 3)
-90310
Net cash used in financing activities
-60310
Net increase in cash
43500
Cash balance at prior year-end
44000
Cash balance at current year-end
87500
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