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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 $67,600 cash. Received cash for the sale of equipment that had cost $58,600, yielding a $3,000 gain. Prepaid Expenses and Wages Payable relate to Other Expenses on the income statement. All purchases and sales of inventory are on credit. 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.)

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jepessoa

Answer:

                               Ikiban Inc.

                     Statement of Cash flows

               For the Year Ended June 30, 2017

Cash flow from operating activities:

Net income                                                               $117,510

Adjustments to net income:

  • Depreciation expense $67,600
  • Decrease in inventory $27,200
  • Decrease in prepaid expenses $1,900
  • Increase in accounts receivable ($18,500)
  • Gain from sale of equipment ($3,000)
  • Decrease in accounts payable ($9,500)
  • Decrease in wages payable ($9,900)
  • Decrease in taxes payable ($2,800)             $53,000

Net cash flow from operating activities                 $170,510

Cash flow from investing activities:

Purchase of new equipment                                 ($67,600)

Disposal of old equipment                                     $13,500

Net cash flow from investing activities                 ($54,100)

Cash flow from financing activities:

Issuance of common stock                                   $69,000

Retirement of note payable                                 ($30,000)

Distributed dividends                                           ($106,310)

Net cash flow from financing activities                 ($67,310)

Net cash increase                                                   $49,100

Cash balance June 30, 2016                                 $53,000

Cash balance June 30, 2017                                 $102,100

Tundexi

The Cash balance of Ikiban Inc.as at June 30, 2017 is $102,100.

Here, we are calculating the Statement of Cash flows for Ikiban Inc.

                              Statement of Cash flows

                      For the Month Ended June 30, 2017

Particulars                                                                    Amount

Cash flow from operating activities:

Net income                                                                   $117,510

Adjustments to net income

Depreciation expense                          $67,600

Decrease in inventory                           $27,200

Decrease in prepaid expenses            $1,900

Increase in accounts receivable          ($18,500)

Gain from sale of equipment                ($3,000)

Decrease in accounts payable             ($9,500)

Decrease in wages payable                 ($9,900)

Decrease in taxes payable                   ($2,800)       $53,000

Net cash flow from operating activities                   $170,510

Cash flow from investing activities:

Purchase of new equipment                  ($67,600)

Disposal of old equipment                      $13,500

Net cash flow from investing activities                    ($54,100)

Cash flow from financing activities:

Issuance of common stock                     $69,000

Retirement of note payable                    ($30,000)

Distributed dividends                              ($106,310)

Net cash flow from financing activities                     ($67,310)

Net cash increase                                                         $49,100

Cash balance June 30, 2016                                        $53,000

Cash balance June 30, 2017                                       $102,100

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