The comparative statement of financial positions of Mikos Inc. as at December 31, 2011 and 2012, and its income statement for the year ended December 31, 2012, are presented below.

Additional information:

a. Land was sold for cash at its carrying amount.

b. The short-term investments will mature in February 2013.

c. Cash dividends were declared and paid in 2012.

d. New equipment with a cost of \(\$ 166,000\) was purchased for cash, and old equipment was sold at its carrying amount.

e. Long-term notes of \(\$ 10,000\) were paid in cash, and notes of \(\$ 30,000\) were converted to shares.

Required:
1. Prepare a statement of cash flows for Mikos Inc. for the year ended December 31, 2012. Use the indirect method to report cash flows from operating activities.
2. Assume the role of a bank loan officer who is evaluating this company's cash flow situation. Analyze the statement of cash flows you prepared in (1).
3. What additional information does the statement of cash flows provide that is not available on either the statement of financial position or the income statement? Explain.

Transcribed Image Text:

MIKOS INC. Comparative Statements of Financial Position December 31 Assels Cash Short-term investments Trade receivables Inventories, at cost Prepayments Land Buildings and equipment, ret Intangible assets Liabilities and Shareholders' Equity Trade payables Income tax payable Accrued liabilit'es Long-term notes payable Share capital Retained earnings 2012 2011 $ 9,000 $ 17,000 45,000 20,000 68,000 26,000 54,000 40,000 4,000 6,000 45,000 70,000 280,000 179,000 24,000 28,00C $529,000 $386,000 $ 17,000 $ 40.000. 6,000 1,000 10,000 -0- 110,000 150.000 200,000 60,000 186,000 135,000 $529,000 $386,000