Secure httpsnewconnectmheducationcomflowconnecthtml 16Quiz T

Secure https//newconnect.mheducation.com/flow/connect.html 16-Quiz The following financial statements and additional information are reported June 3e, 2917 and 2816 Assets Cash Accounts receivable, net 98,880 73,800 Inventorsy 85,880 119,5ee Prepaid expenses Total current assets Equipment 70 268,30 137,000 (38,899) (2e,969) 146,8e9 $392, 70 $385, 3ee 47,8e9 63,8ee 8,200 Total assets Liabilities and Equity Accounts payable Wages payable Income taxes payable Total current liabilities Notes payable (long term) Total liabilities Equity Common stock, $5 par value Retained earnings 8,28019,48 6e, 88e 52,888871 80 9e,698 112,800 172,6e0 264,eee 182,eee 15,9ee $392,?? 38,788 $385 , 3ee Total liabilities and equity Incone Statenent For Year Ended June 38, 2817 Sales Cost of goods sold Gross profit Operating expensers $788,888 433 880 355,800 Depreciation expense 588,600 Other expenses Total operating expenses 185,480 Other gains (losses) Gain on sale of equipment Income before taxes Income taxes expense Net incone 189,60e 6.820 $143,52e Additional Information a. A $30.000 note payable s retired at its $30.000 carrying (book) value in exchange for cash b. The only changes affecting retained earnings are net income and cash dividends paid c Nei equipment is acquired for $79,600 cash. d. Received cash for the sale of equipment that nad cost $70,600, yielding a $4200 gain e. Prepa id Expenses and Wages Payaple reiate to Othe Expeoses on the income statement t. A purchases and sales of inventory are on credit.

Solution

Workings:

1. Cash dividends paid = Beginning balance of retained earnings + Net income - Ending balance of retained earnings = $30700 + $143510 - $15900 = $158310

2. Sale proceeds from equipment:

Accumulated depreciation reversed on equipment sold = Beginning balance of Accumulated depreciation + Depreciation expense - Ending balance of Accumulated depreciation = $20000 + $80600 - $38000 = $62600

Book value of equipment sold = Cost - Accumulated depreciation = $70600 - $62600 = $8000

Sale proceeds = Book value + Gain on sale = $8000 + $4200 = $12200

IKIBAN INC.
Statement of Cash Flows (Indirect Method)
For Year Ended June 30, 2017
Cash Flows from Operating Activities
Net income		143510
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation expense	80600
Gain on sale of equipment	-4200
Changes in current operating assets and liabilities
Increase in Accounts Receivable	-25000
Decrease in Inventory	33700
Decrease in Prepaid expenses	3200
Decrease in Accounts payable	-16000
Decrease in Wages payable	-11200
Decrease in Income taxes payable	-2600
		58500
Net cash provided by operating activities		202010
Cash Flows from Investing Activities
Cash paid for equipment	-79600
Cash received from sale of equipment	12200
Net cash used in investing activities		-67400
Cash Flows from Financing Activities
Cash received from stock issuance	82000
Cash paid to reture notes	-30000
Cash paid for dividends	-158310
Net cash used in financing activities		-106310
Net increase (decrease) in cash		28300
Cash balance at prior year-end		66000
Cash balance at current year-end		94300