The comparative statements of financial position of Mikos Inc. as at December 31, 2017 and 2018, and its statement of earnings for the year ended December 31, 2018, are presented below: MIKOS INC. Comparative Statements of Financial Position December 31 2018 2017 Assets Cash $ 9,000 $ 17,000 Short-term investments 45.000 20,000 Accounts receivable 68,000 26,000 Inventories, at cost 54,000 40,000 Prepaid expenses 4,000 6.000 Land 45,000 70,000 Property, plant, and equipment, net 280.000 179.000 Intangible assets 24,000 28,000 $ 529,000 $ 386,000 Liabilities and Shareholders' Equity Accounts payable Income tax payable Accrued liabilities Long-term notes payable Contributed capital Retained earnings $ 17,000 $ 40,000 6,000 1,000 10,000 -O- 110.000 150.000 200,000 60,000 186,000 135,000 $ 529,000 $ 386,000 $ 850,000 MIKOS INC Statement of Earnings For the Year Ended December 31, 2018 Sales Cost of sales Amortization expense-intangible assets Depreciation expense-property, plant, and equipment Operating expenses Interest expense $ 430,000 4,000 33,000 221,000 12,000 700.000 Earnings before income taxes Income tax expense 150,000 45,000 Net earnings $ 105,000 Additional information is as follows: a Land was sold for cash at its carrying amount. b. The short-term investments will mature in February 2019. c. Cash dividends were declared and paid in 2018. 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, 2018 by using the indirect method. (Negative answers should be indicated by a minus sign.) MIKOS INC. Statement of Cash Flows For the Year Ended December 31, 2018 Cash flows from operating activities: Net earnings $ 105,000 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization expense 37,000 Decrease in accounts payable (23,000) Decrease in prepaid expenses 2,000 Increase in accounts receivable I (42,000) Increase in accrued liabilities 10,000 Increase in income tax payable 5,000 Increase in inventory (14,000) $ 80,000 Net cash flow from operating activities Cash flows from investing activities: 25,000 Sale of equipment Purchase of equipment Sale of land Net cash flow used for investing activities Cash flows from financing activities: Issuance of common shares 25,000 Payment of cash dividends Repayment of long-term note Net cash flow from financing activities Net increase in cash and short-term investments Cash and short-term investments, beginning of year Cash and short-term investments, end of year 105,000 $ 105,000
