P11-68A. (Learning Objectives 3, 4, 5, 6: Preparing the statement of cash flows—indirect and direct methods) The comparative Balance Sheets of Ibrahim Design Studio, Inc., at June 30, 20X6 and 20X5, and transaction data for fiscal year 20X6 are as follows:

Transaction data for the year ended June 30, 20X6:

a. Net income, $81,700

b. Depreciation expense on equipment, $14,900

c. Purchased long-term investment, $5,700

d. Sold land for $54,900, including $6,500 loss

e. Acquired equipment by issuing long-term note payable, $15,600

f. Paid long-term note payable, $62,400 g. Received cash for issuance of shares, $3,400 h. Paid cash dividends, $49,400 i. Paid short-term note payable by issuing shares, $6,000 Requirements 1. Prepare the statement of cash flows of Ibrahim Design Studio, Inc., for the year ended June 30, 20X6, using the indirect method to report operating activities. Also prepare the accompanying schedule of noncash investing and financing activities. All current accounts except short-term notes payable result from operating transactions.
2. Prepare a supplementary schedule showing cash flows from operations by the direct method. The accounting records provide the following: collections from customers, $246,700; interest received, $1,700; payments to suppliers, $119,600; payments to employees, $42,900; payments for income tax, $13,900; and payment of interest, $4,900.

1 2 3 A1 Ibrahim Design Studio Comparative Balance Sheets 4 Current assets: 20X6 June 30 20X5 Increase (Decrease) $ 28,900 $ 21,000 $ 7,900 5 Cash 6 Accounts receivable 7 8 Inventories Prepaid expenses 9 Long-term investment 10 Equipment, net 11 Land 12 13 Current liabilities: Notes payable, short-term Accounts payable Income tax payable 48,800 31,700 17,100 78,400 80,700 (2,300) 3,100 2,200 900 10,300 5,600 4,700 74,000 73,300 700 33,100 94,500 (61,400) $276,600 $309,000 $ (32,400) $ 14,000 $ 19,000 $ (5,000) 14 15 29,400 40,400 (11,000) 16 13,200 14,400 (1,200) 17 Accrued liabilities 3,700 9,400 (5,700) 18 Interest payable 3,400 2,400 1,000 19 Salary payable 1,000 4,400 (3,400) 20 Long-term note payable 47,200 94,000 (46,800) 21 Share capital 59,400 52,000 7,400 22 Retained earnings 105,300 73,000 32,300 23 $276,600 $309,000 $ (32,400) 24