Given the Balance Sheet and Income Statement of Michaels Company: 1. Prepare the operating activities section of the statement of cash flows using the direct method

2. Prepare the statement of cash flows for Michaels Company using the indirect method.

comparative balance sheets As of December 31, 2014 and 2013 Cash Accounts receivable Short-term investment Inventory Pre-paid rent Pre-paid insurance Supplies Land Building Accumulated depreciation - building Equipment Accumulated depreciation - equipment Patents Total assets Accounts payable Income tax payable Salaries and wages payable Short-term notes payable Long-term notes payable Bonds payable Premium on bonds payable Common stock Paid-in in excess of par - common stock Retained earnings Total liabilities and stockholders' equity 2014 2013 $10,000 $4,000 20,500 12,950 22,000 30,000 42,000 35,000 3,000 12,000 2,100 900 1,000 750 125,000 175,000 350,000 350,000 (105,000) (87,500) 525,000 400,000 (130,000) (112,000) 45.000 50.000 $910,600 $871,100 $22,000 $32,000 5,000 4,000 5,000 3,000 Income statement For the year ended on December 31, 2014 Sales revenue Cost of goods sold Gross margin Operating expenses $1,160,000 748.000 412,000 Selling expenses $79,200 Administrative expenses 156,700 Depreciation/amortization expenses 40,500 276.400 Income from operations 135,600 Other revenues/expenses Gain on sale of land 8,000 Gain on sale of short-term investment 4,000 Dividend revenue 2,400 Interest expense (51,750) (37,350) Income before taxes 98,250 Income tax expense 39,400 Net income $58,850 10,000 10,000 Note: dividends are declared and paid in 2014. Pre-paid rent, pre-paid 60,000 70,000 insurance, supplies, and salaries and wages payable are related to 400,000 400,000 Administrative expense. No building is purchased or sold. 20,303 25,853 240,000 220,000 25,000 17,500 123297 88,747 PALM $871,100 Instructions 1. Prepare the operating activities section of the statement of cash flows for Michaels Company using the direct method. 2. Prepare the statement of cash flows for Michaels Company using the indirect method (on a separate sheet of paper or back)