Question: 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:
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MILLCO, INC. Balance Sheets February 28 and January 31, 2009
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Assets
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February 28
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January 31
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Cash
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$42,000
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$37,000
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Accounts Receivable
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64,000
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53,000
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Merchandise inventory
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81,000
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94,000
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Total current assets
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$187,000
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$184,000
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Plant and Equipment:
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Production Equipment
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166,000
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152,000
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Less : Accumulated depreciation
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(24,000)
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(21,000)
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Total assets
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$329,000
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$315,000
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Liabilities
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Accounts Payable
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$37,000
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$41,000
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Short-term debt
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44,000
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44,000
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Other accrued liabilities
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21,000
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24,000
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Total Current liabilities
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$102,000
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$109,000
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Long- term debt
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33,000
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46,000
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Total Liabilities
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$135,000
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$155,000
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Owner's Equity
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Common Stock, no par value, 40,000 shares authorized, 30,000 and 28,000
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Shares issued , respectively
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$104,000
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$96,000
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Retained earnings:
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Beginning Balance
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$64,000
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$43,000
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Net income for month
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36,000
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29,000
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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 example, 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?]