The following financial statements and additional informatio

The following financial statements and additional information are reported. Indirect: Preparing statement of cash flows P1 P2 P3 A1 IKIBAN INC. Comparative Balance Sheets June 30, 2017 and 2016 2017 Assets Cash Inventory Prepaid expenses Total current assets . Equipment.. 87.500 $ 44,000 65,000 51,000 63,800 86,500 44005,400 220,700 186,900 124,000 115,000 (27,000) (9,000) IKIBAN INC Income Statement For Year Ended June 30, 2017 $678,000 411,000 267,000 Gross profit Operating expenses Accounts payable Wages payable Income taxes payable Total current Sabilities Notes payable (long term). s 25,000 $ 30,000 6,000 15,000 3400 3,800 Depreciation expense.. Other expenses 67,000 34.400 48,800 30,00060,000 64,400 108,800 Total operating expenses Gain on sale of equipment Income before taxes Income taxes expense 141,400 2,000 43,890 Equity Common stock, $5 par value. Retained earnings Total liabilities and equity. ...220,000 160,000 . 33,300 24.100 $292.900 $99,510 $317.700

Solution

Answer 1. IKIBAN INC Statement of Cash Flows (Indirect Method) For the Year ended June 30, 2017 Cash Flow from opearating activities: Net Income        99,510.00 Add/(Less) non cash effects on operating activities Depreciation expense - Plant & Equipment        58,600.00 Gain on Sale of Equipment        (2,000.00) Increase in Accounts Receivables     (14,000.00) Decrease in Inventory        22,700.00 Decrease in Prepaid Expenses          1,000.00 Decrease in Accounts Payables        (5,000.00) Decrease in Wages Payable        (9,000.00) Decrease in Income Tax Payable           (400.00)        51,900.00 Net Cash provided by operating activities     151,410.00 Cash flow from Investing Activities Purchase of Equipment     (57,600.00) Sale of Equipment        10,000.00 Cash Flow / (used) from Investing activities     (47,600.00) Cash Flow from Financing Activities Cash paid to Notes Payable     (30,000.00) Issue of Common Stock        60,000.00 Cash dividend paid     (90,310.00) Cash Flow from Financing Activities     (60,310.00) Net Increase / (Decrease) in Cash        43,500.00 Cash balance at the beginning - June 30, 2016        44,000.00 Cash balance at the end - June 30, 2017        87,500.00 Plant & Equipment Account Particulars Amt Particulars Amt To Balance B/f        115,000.00 By Cash (Bal. fig.)          10,000.00 To Cash          57,600.00 By Accumulated dep.          40,600.00 To Gain on Sale of Equip.            2,000.00 By Balance C/f        124,000.00        174,600.00        174,600.00 Accumulated Dep. Particulars Amt Particulars Amt To Plant & Equipment (Bal.Fig.)          40,600.00 By Balance b/f            9,000.00 To Balance C/f          27,000.00 By Dep. Exp.          58,600.00          67,600.00          67,600.00 Retained Earnings Particulars Amt Particulars Amt To Cash Dividend (Bal. Fig)          90,310.00 By Balance b/f          24,100.00 To Balance C/f          33,300.00 By Net Income          99,510.00        123,610.00        123,610.00 Answer 2. Cash Flow on Total Assets Ratio = Operating Cash Flows / Average Total Assets Average Total Assets = ($292,900 + $317,700) / 2 Average Total Assets = $305,300 Cash Flow on Total Assets Ratio = $151,410 / $305,300 Cash Flow on Total Assets Ratio = 49.59% (Approx.)