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ID: 2529065 • Letter: R
Question
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[The following information applies to the questions displayed below.]
The following financial statements and additional information are reported.
Additional Information
A $30,000 note payable is retired at its $30,000 carrying (book) value in exchange for cash.
The only changes affecting retained earnings are net income and cash dividends paid.
New equipment is acquired for $76,600 cash.
Received cash for the sale of equipment that had cost $67,600, yielding a $3,900 gain.
Prepaid Expenses and Wages Payable relate to Other Expenses on the income statement.
All purchases and sales of inventory are on credit.
rev: 06_20_2017_QC_CS-91585, 12_05_2017_QC_CS-111198
Using the direct method, prepare the statement of cash flows for the year ended June 30, 2017. (Amounts to be deducted should be indicated with a minus sign.)
IKIBAN INC.Comparative Balance Sheets
June 30, 2017 and 2016 2017 2016 Assets Cash $ 96,100 $ 63,000 Accounts receivable, net 93,500 70,000 Inventory 82,800 115,000 Prepaid expenses 6,300 9,200 Total current assets 278,700 257,200 Equipment 143,000 134,000 Accum. depreciation—Equipment (36,500 ) (18,500 ) Total assets $ 385,200 $ 372,700 Liabilities and Equity Accounts payable $ 44,000 $ 58,500 Wages payable 7,900 18,800 Income taxes payable 5,300 7,600 Total current liabilities 57,200 84,900 Notes payable (long term) 49,000 79,000 Total liabilities 106,200 163,900 Equity Common stock, $5 par value 258,000 179,000 Retained earnings 21,000 29,800 Total liabilities and equity $ 385,200 $ 372,700
Explanation / Answer
Statement of cash flows for the year ended June 30, 2017 (Direct method) Cash flow from operating activities Cash collection from sale * 749500 Cash payment for cost of goods sold ** -412300 Cash payment for operating expenses *** -94000 Cash payment of income taxes **** -48090 Net cash flow from operating activities 195110 Cash flow from investing activities Sale of equipment ***** 11900 Purchase of equipment -76600 Net cash flow from investing activities -64700 Cash flow from financing activities Retirement of note payable -30000 Issue of common stock 79000 Cash dividends paid ****** -146310 Net cash flow from financing activities -97310 Net cash flow 33100 Cash balance as on July1, 2016 63000 Cash balance as on June 30, 2017 96100 Cash from sale Accounts receivable as on July 1, 2016 70000 Plus : Sale for the year 773000 Total 843000 Less: Accounts receivable as on June 30, 2017 93500 Cash collection from sale * 749500 Cash payment for cost of goods sold Cost of goods sold for the year 430000 Plus: Ending balance of inventory 82800 Total 512800 Less: Beginning balance of inventory 115000 Purchase of inventory 397800 Plus: Beginning accounts payable 58500 456300 Less: Ending accounts payable 44000 Cash payment for cost of goods sold ** 412300 Cash payment for operating expenses Other operating expenses for the year 86000 Plus: Ending prepaid expeses 6300 92300 Less; Beginning prepaid expenses 9200 83100 Add: Beginning balance of wages payable 18800 101900 Less: Ending balance of wages payable 7900 Cash payment for operating expenses *** 94000 Paymnt of taxes Income tax payable on July 1, 2016 7600 Plus: Income tax for the year 45790 53390 Less: Income tax payable on June 30, 2017 5300 Cash payment for income taxes **** 48090 Depreciation on equipment sold Accumulated depreciation on July 1, 2016 18500 Plus : Depreciation for the year 77600 Total Accumulated Depreciation 96100 Less: Accumulated depreciation on June30, 2017 36500 Depreciation on the equipment sold * 59600 Cash from sale of equipment Cost of the equipment sold 67600 Less: Depreciation on the equipment sold * 59600 Book value of the equipment sold 8000 Plus : Gain on sale of equipment 3900 Cash from sale of equipment ***** 11900 Dvidends paid Retained earnings on July 1, 2016 29800 Plus: Net income for the year 137510 Total 167310 Less: Retained earnings on June 30, 2017 21000 Cash dividends paid ****** 146310
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