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.