Secure https//newconnect.mheducation.com/flow/connect.html 16-Quiz The following

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Secure https//newconnect.mheducation.com/flow/connect.html 16-Quiz The following financial statements and additional information are reported June 3e, 2917 and 2816 Assets Cash Accounts receivable, net 98,880 73,800 Inventorsy 85,880 119,5ee Prepaid expenses Total current assets Equipment 70 268,30 137,000 (38,899) (2e,969) 146,8e9 $392, 70 $385, 3ee 47,8e9 63,8ee 8,200 Total assets 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 8,28019,48 6e, 88e 52,888871 80 9e,698 112,800 172,6e0 264,eee 182,eee 15,9ee $392,?? 38,788 $385 , 3ee Total liabilities and equity Incone Statenent For Year Ended June 38, 2817 Sales Cost of goods sold Gross profit Operating expensers $788,888 433 880 355,800 Depreciation expense 588,600 Other expenses Total operating expenses 185,480 Other gains (losses) Gain on sale of equipment Income before taxes Income taxes expense Net incone 189,60e 6.820 $143,52e Additional Information a. A $30.000 note payable s 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 Nei equipment is acquired for $79,600 cash. d. Received cash for the sale of equipment that nad cost $70,600, yielding a $4200 gain e. Prepa id Expenses and Wages Payaple reiate to Othe Expeoses on the income statement t. A purchases and sales of inventory are on credit.

Explanation / Answer

Workings:

1. Cash dividends paid = Beginning balance of retained earnings + Net income - Ending balance of retained earnings = $30700 + $143510 - $15900 = $158310

2. Sale proceeds from equipment:

Accumulated depreciation reversed on equipment sold = Beginning balance of Accumulated depreciation + Depreciation expense - Ending balance of Accumulated depreciation = $20000 + $80600 - $38000 = $62600

Book value of equipment sold = Cost - Accumulated depreciation = $70600 - $62600 = $8000

Sale proceeds = Book value + Gain on sale = $8000 + $4200 = $12200

IKIBAN INC. Statement of Cash Flows (Indirect Method) For Year Ended June 30, 2017 Cash Flows from Operating Activities Net income 143510 Adjustments to reconcile net income to net cash provided by operating activities Depreciation expense 80600 Gain on sale of equipment -4200 Changes in current operating assets and liabilities Increase in Accounts Receivable -25000 Decrease in Inventory 33700 Decrease in Prepaid expenses 3200 Decrease in Accounts payable -16000 Decrease in Wages payable -11200 Decrease in Income taxes payable -2600 58500 Net cash provided by operating activities 202010 Cash Flows from Investing Activities Cash paid for equipment -79600 Cash received from sale of equipment 12200 Net cash used in investing activities -67400 Cash Flows from Financing Activities Cash received from stock issuance 82000 Cash paid to reture notes -30000 Cash paid for dividends -158310 Net cash used in financing activities -106310 Net increase (decrease) in cash 28300 Cash balance at prior year-end 66000 Cash balance at current year-end 94300

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