The following financial statements and additional information are reported KIBAN
ID: 2526380 • Letter: T
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The following financial statements and additional information are reported KIBAN INC Comparative Balance Sheets June 30, 2016 and 2015 2016 2015 Assets as Accounts receivable, net Inventory Prepaid expenses Total current assets Equipment Accum. depreciation-Equipment Total assets 69,000 66,100 4.400 252.100 131,000 (28,900) $ 354.200 $ 112.600 57,200 51,300 96,100 6,000 210,600 118,000 (10,200) 318.400 Liabilities and Equity Accounts payable Wages payable ncome taxes payable Total current liabilities Notes payable (long term) Total liabilities Equity Common stock, $5 par value Retained earnings Total liabilities and equity $ 26,300 32,400 16,400 3700 52,500 76,000 128,500 7,100 3,000 36,400 56,000 92,400 237000 24,800 $354,200 182,000 7,900 318,400 IKIBAN INC. Income Statement For Year Ended June 30, 2016 Sales Cost of goods sold Gross profit Operating expenses $ 673.000 410,000 263,000 $57,700 66,100 Depreciation expense Other expenses Total operating expenses 123.800 139,200 Other gains (losses) Gain on sale of equipment Income before taxes Income taxes expense Net income 2,600 141,800 56,720 $ 85,080 Additional Information a. A $20,000 note payable is retired at its $20,000 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 $62.400 cash. d. Received cash for the sale of equipment that had cost $49,400, yielding a $2,600 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
Answer 1. IKIBAN INC Statement of Cash Flows (Indirect Method) For the Year ended June 30, 2016 Cash Flow from opearating activities: Net Income 85,080.00 Add/(Less) non cash effects on operating activities Depreciation expense - Plant & Equipment 57,700.00 Gain on Sale of Equipment (2,600.00) Increase in Accounts Receivables (17,700.00) Decrease in Inventory 30,000.00 Decrease in Prepaid Expenses 1,600.00 Decrease in Accounts Payables (6,100.00) Decrease in Wages Payable (9,300.00) Decrease in Income Tax Payable (700.00) 52,900.00 Net Cash provided by operating activities 137,980.00 Cash flow from Investing Activities Purchase of Equipment (62,400.00) Sale of Equipment 13,000.00 Cash Flow / (used) from Investing activities (49,400.00) Cash Flow from Financing Activities Cash paid to Notes Payable (20,000.00) Issue of Common Stock 55,000.00 Cash dividend paid (68,180.00) Cash Flow from Financing Activities (33,180.00) Net Increase / (Decrease) in Cash 55,400.00 Cash balance at the beginning - June 30, 2016 57,200.00 Cash balance at the end - June 30, 2017 112,600.00 Plant & Equipment Account Particulars Amt Particulars Amt To Balance B/f 118,000.00 By Cash (Bal. fig.) 13,000.00 To Cash 62,400.00 By Accumulated dep. 39,000.00 To Gain on Sale of Equip. 2,600.00 By Balance C/f 131,000.00 183,000.00 183,000.00 Accumulated Dep. Particulars Amt Particulars Amt To Plant & Equipment (Bal.Fig.) 39,000.00 By Balance b/f 10,200.00 To Balance C/f 28,900.00 By Dep. Exp. 57,700.00 67,900.00 67,900.00 Retained Earnings Particulars Amt Particulars Amt To Cash Dividend (Bal. Fig) 68,180.00 By Balance b/f 7,900.00 To Balance C/f 24,800.00 By Net Income 85,080.00 92,980.00 92,980.00 Answer 2. Cash Flow on Total Assets Ratio = Operating Cash Flows / Average Total Assets Average Total Assets = ($318,400 + $354,200) / 2 Average Total Assets = $336,300 Cash Flow on Total Assets Ratio = $137,980 / $336,300 Cash Flow on Total Assets Ratio = 41.03% (Approx.)
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