The following financial statements and additional information are reported.

IKIBAN INCORPORATED
Comparative Balance Sheets
At June 30	2027	2026
Assets
Cash	$ 284,800	$ 156,420
Accounts receivable, net	142,200	69,520
Inventory	126,400	424,080
Prepaid expenses	7,900	17,380
Total current assets	561,300	667,400
Equipment	221,200	288,000
Accumulated depreciation—Equipment	(55,000)	(86,400)
Land	62,500	0
Total assets	$ 790,000	$ 869,000
Liabilities and Equity
Accounts payable	$ 55,300	$ 86,900
Wages payable	15,800	34,800
Income taxes payable	7,900	13,000
Total current liabilities	79,000	134,700
Notes payable (long term)	189,600	299,800
Total liabilities	268,600	434,500
Equity
Common stock, $5 par value	418,700	365,000
Retained earnings	102,700	69,500
Total equity	521,400	434,500
Total liabilities and equity	$ 790,000	$ 869,000

IKIBAN INCORPORATED
Income Statement
For Year Ended June 30, 2027
Sales	$ 1,902,600
Cost of goods sold	1,290,000
Gross profit	612,600
Operating expenses (excluding depreciation)	461,400
Depreciation expense	28,600
	122,600
Other gains (losses)
Gain on sale of equipment	1,400
Income before taxes	124,000
Income taxes expense	24,800
Net income	$ 99,200

Additional Information

1. A $110,200 notes payable is retired at its $110,200 carrying (book) value in exchange for cash.
2. Declared and paid cash dividends of $66,000.
3. Land is acquired for $62,500 cash.
4. Received $8,200 cash for the sale of equipment that had cost $66,800, yielding a $1,400 gain.
5. Prepaid Expenses and Wages Payable relate to Operating Expenses on the income statement.
6. All purchases and sales of inventory are on credit.
7. Received $53,700 cash from issuing 20,600 shares of common stock.

Using the direct method, prepare the statement of cash flows for the year ended June 30, 2027.

Note: Enter amounts to be deducted as negative values.

Solution

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