Exercise 12-11 Indirect: Preparing statement of cash flows LO P1, P2, P3, A1 [Th
ID: 2559655 • Letter: E
Question
Exercise 12-11 Indirect: Preparing statement of cash flows LO P1, P2, P3, A1
[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 $70,600 cash.
Received cash for the sale of equipment that had cost $61,600, yielding a $3,300 gain.
Prepaid Expenses and Wages Payable relate to Other Expenses on the income statement.
All purchases and sales of inventory are on credit.
Exercise 12-11 Part 1
Required:
(1) Prepare a statement of cash flows for the year ended June 30, 2017, using the indirect method. (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 $ 79,700 $ 57,000 Accounts receivable, net 84,500 64,000 Inventory 76,800 106,000 Prepaid expenses 5,700 8,000 Total current assets 246,700 235,000 Equipment 137,000 128,000 Accum. depreciation—Equipment (33,500 ) (15,500 ) Total assets $ 350,200 $ 347,500 Liabilities and Equity Accounts payable $ 38,000 $ 49,500 Wages payable 7,300 17,600 Income taxes payable 4,700 6,400 Total current liabilities 50,000 73,500 Notes payable (long term) 43,000 73,000 Total liabilities 93,000 146,500 Equity Common stock, $5 par value 246,000 173,000 Retained earnings 11,200 28,000 Total liabilities and equity $ 350,200 $ 347,500
Explanation / Answer
IKIBAN INC Cash Flow Statement For the year ended December 31, 2017 Cash flows from operating activities Net Income $ 125,510 Adjustment to reconcile net income to: Depreciation expense $ 71,600 Gain on sale of equipment $ (3,300) Increase in accounts receivable $ (20,500) Decrease in inventory $ 29,200 Decrease in prepaid expenses $ 2,300 Decrease in accounts payable $ (11,500) Decrease in wages payable $ (10,300) Decrease in income tax payable $ (1,700) $ 55,800 Net cash provided by operating activities $ 181,310 Cash flows from investing activities proceeds from sale of equipment $ 11,300 $61,600 +$33,500-$15,500-$71,600+$3,300 Purchase of equipment $ (70,600) Net cash used by investing activities $ (59,300) Cash flows from financing activities Proceeds from issue of stock $ 73,000 Repayment of notes $ (30,000) Payment of dividend $ (142,310) $11,200-$28,000-$125,510 Net cash used by financing activities $ (99,310) Net increase in cash and cash equivalents $ 22,700 Cash and cash equivalents at beginning of period $ 57,000 Cash and cash equivalents at end of period $ 79,700
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.