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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