Question

 

IKIBAN INC.
Comparative Balance Sheet
June 30, 2018, and 2017
	2018	2017
Assets
Cash	$73,100	$68,000
Accounts Receivable, net	$101,000	$75,000
Inventory	$87,800	$122,500
Prepaid Expenses	$6,800	$10,200
Total Current Assets	$268,700	$275,700
Equipment	$148,000	$139,000
Accum. Depreciation - Equipment	($39,000)	($21,000)
Total Assets	$377,700	$393,700
Liabilities and Equity
Accounts Payable	$49,000	$66,000
Wages Payable	$8,400	$19,800
Income Taxes Payable	$5,800	$8,600
Total current liabilities	$63,200	$94,400
Notes Payable (long-term)	$54,000	$84,000
Total liabilities	$117,200	$178,400
Equity
Common stock, $5 par value	$268,000	$184,000
Retained Earnings	($7,500)	$31,300
Total liabilities and equity	$377,700	$393,700

 

IKIBAN INC.
Income Statement
For Year Ended June 30, 2018
Sales		$798,000
Cost of goods sold		$435,000
Gross Profit		$363,000
Operating Expenses:
Depreciation Expenses	$82,600
Other Expenses	$91,000	$173,600
Total operating expenses		$189,400
Other gains (losses):
Gain on sale of equipment		$4,400
Income before taxes		$193,800
Income taxes expenses		$46,290
Net Income		$147,510

 

Additional Information:

a. A $30,000 note payable is 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. New equipment is acquired for $81,600 cash.

d. Received cash for the sale of equipment that had cost $72,600, yielding a $4,400 gain.

e. Prepaid Expenses and Wages Payable relate to Other Expenses on the income statement.

f. All purchases and sales of inventory are on credit.

 

Required:

1. Prepare the Cash Flow Statement using the indirect method.

2. Compute the Cash Flow on Total Assets ratio in 2018.