Exercise 12-11 Indirect: Preparing statement of cash flows LO P1, P2, P3, A1 [Th
ID: 2535949 • 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.
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 $ 99,700 $ 57,000 Accounts receivable, net 84,500 64,000 Inventory 76,800 106,000 Prepaid expenses 5,700 8,000 Total current assets 266,700 235,000 Equipment 137,000 128,000 Accum. depreciation—Equipment (33,500 ) (15,500 ) Total assets $ 370,200 $ 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 31,200 28,000 Total liabilities and equity $ 370,200 $ 347,500
Explanation / Answer
Cash Flow from Operating Activity:-
Amount
Amount
Net Income
125510
Gain on Equipment sold
(3300)
Depreciation
71600
Increase A/c Receivable
(20500)
Decrease Inventory
29200
Decrease Prepaid Exp
2300
Decrease A/c Payable
(11500)
Decrease Wage Payable
(10300)
Imcome Tax Exp
45190
Paid Income Tax (45190+6400-4700)
(46890)
Cash Flow from Operating Activity (A)
181310
181310
Cash Flow from Investing Activity:-
Equipment Purchase
(70600)
Equipment Sold (61600-50300)
11300
Cash Flow from Investing Activity (B)
(59300)
(59300)
Cash Flow from Financing Activity:-
Notes Paid
(30000)
Dividend Paid
(122310)
Common stock issue
73000
(79310)
(79310)
TOTAL CASH FLOW (a+b+c)
42700
Add opening cash
57000
Closing cash
99700
Cash Flow from Operating Activity:-
Amount
Amount
Net Income
125510
Gain on Equipment sold
(3300)
Depreciation
71600
Increase A/c Receivable
(20500)
Decrease Inventory
29200
Decrease Prepaid Exp
2300
Decrease A/c Payable
(11500)
Decrease Wage Payable
(10300)
Imcome Tax Exp
45190
Paid Income Tax (45190+6400-4700)
(46890)
Cash Flow from Operating Activity (A)
181310
181310
Cash Flow from Investing Activity:-
Equipment Purchase
(70600)
Equipment Sold (61600-50300)
11300
Cash Flow from Investing Activity (B)
(59300)
(59300)
Cash Flow from Financing Activity:-
Notes Paid
(30000)
Dividend Paid
(122310)
Common stock issue
73000
(79310)
(79310)
TOTAL CASH FLOW (a+b+c)
42700
Add opening cash
57000
Closing cash
99700
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.