Question

P23.4 (LO 2, 4) (SCF-Direct Method) Michaels Company had available at the end of 2020 the following information. 2019 Michaels Company Comparative Balance Sheets As of December 31, 2020 and 2019 2020 Cash $ 10,000 Accounts receivable 20,500 Short-term investments 22,000 Inventory 42,000 Prepaid rent 3,000 Prepaid insurance 2,100 Supplies 1,000 Land 125,000 Buildings 350,000 Accumulated depreciation-buildings (105,000) Equipment 525,000 Accumulated depreciation-equipment (130,000) Patents 45,000 Total assets $910,600 Accounts payable $ 22,000 Income taxes payable 5,000 Salaries and wages payable 5,000 Short-term notes payable 10,000 Long-term notes payable 60,000 Bonds payable 400,000 Premium on bonds payable 20,303 Common stock 240,000 Paid-in capital in excess of par-common stock 25,000 Retained earnings 123,297 Total liabilities and stockholders' equity $910,600 $ 4,000 12,950 30,000 35,000 12,000 900 750 175,000 350,000 (87,500) 400,000 (112,000) 50,000 $871,100 $ 32,000 4,000 3,000 10,000 70,000 400,000 25,853 220,000 17,500 88,747 $871,100 Michaels Company Income Statement and Dividend Information For the Year Ended December 31, 2020 Sales revenue Cost of goods sold $1,160,000 748.999

Answer 1

Michaels Company 1152450 2400 Statement of Cash Flows For the Year Ended December 31, 2020 - (Direct Method) Cash flows from operating activities Cash receipts: Cash received from customers (1160000+12950-20500) Dividends received Cash payments: Cash paid to suppliers (748000+42000-35000+32000-22000) Cash paid for operating expenses(79200+156700+3000+2100-12000-900+3000-5000) Taxes paid (39400+4000-5000) Interest paid(51750 +25853-20303) Net cash provided by operating activities -765000 -226350 -38400 -57300 67800 Cash flows from investing activities Sale of short-term investments ($8,000+ $4,000) Sale of land ($175,000-$125,000) + $8,000 Purchase of equipment (525000 - 400000 ) Net cash used by investing activities 12000 58000 - 125000 -55000 27500 -10000 -24300 Cash flows from financing activities Proceeds from issuance of common stock (240000-220000+25000-17500) Principal payment on long-term debt Dividends paid Net cash used by financing activities Net increase in cash Cash, January 1, 2020 Cash, December 31, 2020 -6800 6000 4000 10000 58850 Reconciliation of Net Income to Net Cash Provided by Operating Activities: For the Year Ended December 31, 2020 Net income Adjustments to reconcile net income to net cash provided by operating activities: Depreciation/amortization expense Decrease in prepaid rent Increase in income taxes payable Increase in wages payable Increase in accounts receivable Increase in inventory Increase in prepaid insurance Increase in office supplies Decrease in accounts payable Gain on sale of land Gain on sale of short-term investments Amortization of bond premium Total adjustments Net cash provided by operating activities 40500 9000 1000 2000 -7550 -7000 - 1200 -250 -10000 -8000 -4000 -5550 8950 67800