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problem: Make statement of cash flows [indirect method] using balance sheet information 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

Make a statement of cash flows that describe 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 ex, the change in the amount of production equipment is not the result of both a purchase and sale of equipment]. [Suggestion: Determine the purpose of the statement of cash flows? How is this purpose accomplished?]

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M919493

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