Calculate the change that occurred in cash during the month

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Reference no: EM132461959

Following are comparative balance sheets for Millco Inc. at January 31 and February 28. 2020:

Assets

February 28

January 31


Cash

S 21,000

$ 18,500


Accounts receivable

32,000

26,500


Merchandise inventory

40,500

47,000


Total current assets

$ 93,500

I, 92,000


Plant and equipment:

 

 


Production equipment

83,000

76,000


Less: Accumulated depreciation

(12,000)

(10,500)


Total assets

$164,500

$157,500


Liabilities

 

 


Accounts payable

$ 18,500

$ 20,500


22,000

22,000


Short-term debt


Other accrued liabilities

10,500

12.000


Total current liabilities

$ 51,000

$ 54,500


Long-term debt

16.500

23.000


Total liabilities

S 67,500

$ 72,500


Stockholders' Equity

 

 


Common stock, no par value, 20,000 shares authorized, 15,000 and 14,000 shares issued, respectively

$ 52,000

$ 48,000


Retained earnings:

 

 


Beginning balance

$ 32,000

S 21,500


Net income for month

18,000

14,500


Dividends

(5,000)

(4,000)


Ending balance

$ 45,000

5 32,000


Total stockholders' equity

$ 97,000

S 80,000


Total liabilities and stockholders' equity

$164,500

5157.500



Required:

Problem a. Calculate 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 (for example. the change in the amount of production equipment is not the result of both a purchase and sale of equipment). Because the retained earnings section of the balance sheet is. In and of itself. an analysis of the change in the retained earnings account for the month, the row for net income and dividends should be entered as the February amount and not the change. 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.

Problem b. Prepare a statement of cash flows that explains above changes?

Reference no: EM132461959

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