Prepare statement of cash flows

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Reference no: EM1313829

Preparation of cash flow statement using indirect method.

Prepare statement of cash flows (indirect method) using balance sheet data Following are comparative balance sheets for Millco, Inc., at January 31 and February 28, 2009:

MILLCO, INC.
Balance Sheets
February 28 and January 31, 2009

 Assets

28-Feb

31-Jan

Cash ..........................

$42,000

$37,000

Accounts receivable .............................

64,000

53,000

Merchandise inventory .............................

81,000

94,000

Total current assets ...........................

$187,000

$184,000

Plant and equipment:



Production equipment ...........................

166,000

152,000

Less: Accumulated depreciation ..........................

(24000)

(21000)

Total assets ...................................................

$329,000

$315,000

Liabilities



Accounts payable ..........................

$37,000

$41,000

Short-term debt.............................

44,000

44,000

Other accrued liabilities ...........................

21,000

24,000

Total current liabilities ...........................

$102,000

$109,000

Long-term debt .............................

33,000

46,000

Total liabilities .............................

$135,000

$155,000

Owners\' Equity



Common stock, no par value, 40,000 shares authorized, 30,000 and 28,000



Shares issued, respectively ............................

$104,000

$96,000

Retained earnings:



Beginning balance .........................

$64,000

$43,000

Net income for month .............................

36,000

29,000

Dividends ..........................

(10000)

(8000)

Ending balance ............................

$90,000

$64,000

Total owners\' equity ............................

$194,000

$160,000

Total liabilities and owners\' equity ...........................

$329,000

$315,000

Prepare a statement of cash flows that explains the change that occurred in cash during the month. You may assume that the change in each balance sheet amount is due to a single event. Use the space to the right of the January 31 data to enter the difference between the February 28 and January 31 amounts of each balance sheet item; these are the amounts that will be in your solution.

Reference no: EM1313829

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