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The following financial statements and additional information are reported

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The following financial statements and additional information are reported. IKIBAN INC.Comparative Balance Sheets

June 30, 2019 and 2018 2019  2018  Assets        Cash$81,500  $54,000  Accounts receivable, net 80,000   61,000  Inventory 73,800   101,500  Prepaid expenses 5,400   7,400  Total current assets 240,700   223,900  Equipment 134,000   125,000  Accum. depreciation—Equipment (32,000)  (14,000) Total assets$342,700  $334,900  Liabilities and Equity        Accounts payable$35,000  $45,000  Wages payable 7,000   17,000  Income taxes payable 4,400   5,800  Total current liabilities 46,400   67,800  Notes payable (long term) 32,000   70,000  Total liabilities 78,400   137,800  Equity        Common stock, $5 par value 240,000   170,000  Retained earnings 24,300   27,100  Total liabilities and equity$342,700  $334,900  

  

IKIBAN INC.

Income Statement

For Year Ended June 30, 2019Sales   $728,000 Cost of goods sold    421,000 Gross profit    307,000 Operating expenses      Depreciation expense$68,600    Other expenses 77,000    Total operating expenses    145,600      161,400 Other gains (losses)      Gain on sale of equipment    3,000 Income before taxes    164,400 Income taxes expense    44,890 Net income   $119,510 

 

Additional Information

1)A $38,000 note payable is retired at its $38,000 carrying (book) value in exchange for cash.

2)The only changes affecting retained earnings are net income and cash dividends paid.

3)New equipment is acquired for $67,600 cash.

4)Received cash for the sale of equipment that had cost $58,600, yielding a $3,000 gain.

1. Prepaid Expenses and Wages Payable relate to Other Expenses on the income statement.
2. All purchases and sales of inventory are on credit.