Statement of cash flows that describe the change

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Reference no: EM1316244

Statement of cash flows that describe the change that occurred in cash

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	February 28	January 31
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	(24,000)	(21,000)
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
Owner's 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

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 (for example, the change in the amount of production equipment is not the result of both a purchase and sale of equipment). (Hints: What is the purpose of the statement of cash flows? How is this purpose accomplished?

Reference no: EM1316244

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