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P23-4 (LO2, 3, 4) (SCF-Indirect Method) Michaels Ltd. had available at the end of 2022 the following information. Michaels Ltd. Comparative Statements of Financial Position As of December 31, 2022 and 2021 Land Buildings 2022 2021 £125,000 £175,000 350,000 350,000 Accumulated depreciation-buildings (105,000) (87,500) Equipment 525,000 400,000 Accumulated depreciation-equipment (130,000) (112,000) Patents Inventory 45,000 50,000 42,000 35,000 Prepaid rent Prepaid insurance Supplies 3,000 12,000 2,100 900 1,000 750 Accounts receivable 20,500 12,950 Short-term equity investments Cash 22,000 30,000 10,000 4,000 Total assets Share capital-ordinary £910,600 £871,100 £240,000 £220,000 Share premium-ordinary 25,000 17,500 Retained earnings 123,297 88,747 Long-term notes payable 60,000 70,000 Bonds payable 420,303 425,853 Accounts payable 22,000 32,000 Michaels Ltd. Comparative Statements of Financial Position As of December 31, 2022 and 2021 Income taxes payable 5,000 4,000 Salaries and wages payable 5,000 3,000 Short-term notes payable 10,000 10,000 Total equity and liabilities £910,600 £871,100 Michaels Ltd. Income Statement For the Year Ended December 31, 2022 Sales revenue £1,160,000 Cost of goods sold (748,000) Gross margin 412,000 Operating expenses Selling expenses £79,200 Administrative expenses 156,700 Depreciation/Amortization expense 40,500 Total operating expenses Income from operations (276,400) 135,600 Other income and expense 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 Income tax expense 98,250 (39,400) Net income 58,850 Dividends to ordinary shareholders (24,300) To retained earnings £34.550 Instructions Prepare a statement of cash flows for Michaels Ltd. using the direct method. Assume the short-term investments are non-trading. Bond premium amortized was £5,550.

P23-4 (LO2, 3, 4) (SCF-Indirect Method) Michaels Ltd. had available at the end of 2022 the following information. Michaels Ltd. Comparative Statements of Financial Position As of December 31, 2022 and 2021 Land Buildings 2022 2021 £125,000 £175,000 350,000 350,000 Accumulated depreciation-buildings (105,000) (87,500) Equipment 525,000 400,000 Accumulated depreciation-equipment (130,000) (112,000) Patents Inventory 45,000 50,000 42,000 35,000 Prepaid rent Prepaid insurance Supplies 3,000 12,000 2,100 900 1,000 750 Accounts receivable 20,500 12,950 Short-term equity investments Cash 22,000 30,000 10,000 4,000 Total assets Share capital-ordinary £910,600 £871,100 £240,000 £220,000 Share premium-ordinary 25,000 17,500 Retained earnings 123,297 88,747 Long-term notes payable 60,000 70,000 Bonds payable 420,303 425,853 Accounts payable 22,000 32,000 Michaels Ltd. Comparative Statements of Financial Position As of December 31, 2022 and 2021 Income taxes payable 5,000 4,000 Salaries and wages payable 5,000 3,000 Short-term notes payable 10,000 10,000 Total equity and liabilities £910,600 £871,100 Michaels Ltd. Income Statement For the Year Ended December 31, 2022 Sales revenue £1,160,000 Cost of goods sold (748,000) Gross margin 412,000 Operating expenses Selling expenses £79,200 Administrative expenses 156,700 Depreciation/Amortization expense 40,500 Total operating expenses Income from operations (276,400) 135,600 Other income and expense 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 Income tax expense 98,250 (39,400) Net income 58,850 Dividends to ordinary shareholders (24,300) To retained earnings £34.550 Instructions Prepare a statement of cash flows for Michaels Ltd. using the direct method. Assume the short-term investments are non-trading. Bond premium amortized was £5,550.

Cornerstones of Financial Accounting
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
Chapter7: Operating Assets
Section: Chapter Questions
Problem 6MCQ: Refer to the information for Cox Inc. above. What amount would Cox record as depreciation expense...
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P23-4 (LO2, 3, 4) (SCF-Indirect Method) Michaels Ltd. had available at the end of 2022 the following information. Michaels Ltd. Comparative Statements of Financial Position As of December 31, 2022 and 2021 Land Buildings 2022 2021 £125,000 £175,000 350,000 350,000 Accumulated depreciation-buildings (105,000) (87,500) Equipment 525,000 400,000 Accumulated depreciation-equipment (130,000) (112,000) Patents Inventory 45,000 50,000 42,000 35,000 Prepaid rent Prepaid insurance Supplies 3,000 12,000 2,100 900 1,000 750 Accounts receivable 20,500 12,950 Short-term equity investments Cash 22,000 30,000 10,000 4,000 Total assets Share capital-ordinary £910,600 £871,100 £240,000 £220,000 Share premium-ordinary 25,000 17,500 Retained earnings 123,297 88,747 Long-term notes payable 60,000 70,000 Bonds payable 420,303 425,853 Accounts payable 22,000 32,000 Michaels Ltd. Comparative Statements of Financial Position As of December 31, 2022 and 2021 Income taxes payable 5,000 4,000 Salaries and wages payable 5,000 3,000 Short-term notes payable 10,000 10,000 Total equity and liabilities £910,600 £871,100 Michaels Ltd. Income Statement For the Year Ended December 31, 2022 Sales revenue £1,160,000 Cost of goods sold (748,000) Gross margin 412,000 Operating expenses Selling expenses £79,200 Administrative expenses 156,700 Depreciation/Amortization expense 40,500 Total operating expenses Income from operations (276,400) 135,600 Other income and expense 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 Income tax expense 98,250 (39,400) Net income 58,850 Dividends to ordinary shareholders (24,300) To retained earnings £34.550 Instructions Prepare a statement of cash flows for Michaels Ltd. using the direct method. Assume the short-term investments are non-trading. Bond premium amortized was £5,550.
Transcribed Image Text:P23-4 (LO2, 3, 4) (SCF-Indirect Method) Michaels Ltd. had available at the end of 2022 the following information. Michaels Ltd. Comparative Statements of Financial Position As of December 31, 2022 and 2021 Land Buildings 2022 2021 £125,000 £175,000 350,000 350,000 Accumulated depreciation-buildings (105,000) (87,500) Equipment 525,000 400,000 Accumulated depreciation-equipment (130,000) (112,000) Patents Inventory 45,000 50,000 42,000 35,000 Prepaid rent Prepaid insurance Supplies 3,000 12,000 2,100 900 1,000 750 Accounts receivable 20,500 12,950 Short-term equity investments Cash 22,000 30,000 10,000 4,000 Total assets Share capital-ordinary £910,600 £871,100 £240,000 £220,000 Share premium-ordinary 25,000 17,500 Retained earnings 123,297 88,747 Long-term notes payable 60,000 70,000 Bonds payable 420,303 425,853 Accounts payable 22,000 32,000 Michaels Ltd. Comparative Statements of Financial Position As of December 31, 2022 and 2021 Income taxes payable 5,000 4,000 Salaries and wages payable 5,000 3,000 Short-term notes payable 10,000 10,000 Total equity and liabilities £910,600 £871,100 Michaels Ltd. Income Statement For the Year Ended December 31, 2022 Sales revenue £1,160,000 Cost of goods sold (748,000) Gross margin 412,000 Operating expenses Selling expenses £79,200 Administrative expenses 156,700 Depreciation/Amortization expense 40,500 Total operating expenses Income from operations (276,400) 135,600 Other income and expense 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 Income tax expense 98,250 (39,400) Net income 58,850 Dividends to ordinary shareholders (24,300) To retained earnings £34.550 Instructions Prepare a statement of cash flows for Michaels Ltd. using the direct method. Assume the short-term investments are non-trading. Bond premium amortized was £5,550.
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