Question

Following are comparative balance sheets for Millco Inc. at January 31 and February 28, 2020:

MILLCO INC.
Balance Sheets
February 28 and January 31, 2020
	February 28				January 31
Assets
Cash	$	33,600			$	29,600
Accounts receivable		51,200				42,400
Merchandise inventory		64,800				75,200
Total current assets	$	149,600			$	147,200
Plant and equipment:
Production equipment		132,800				121,600
Less: Accumulated depreciation		(19,200	)			(16,800	)
Total assets	$	263,200			$	252,000
Liabilities
Accounts payable	$	29,600			$	32,800
Short-term debt		35,200				35,200
Other accrued liabilities		16,800				19,200
Total current liabilities	$	81,600			$	87,200
Long-term debt		26,400				36,800
Total liabilities	$	108,000			$	124,000
Stockholders' Equity
Common stock, no par value, 32,000 shares authorized, 24,000 and 22,400 shares issued, respectively	$	83,200			$	76,800
Retained earnings:
Beginning balance	$	51,200			$	34,400
Net income for month		28,800				23,200
Dividends		(8,000	)			(6,400	)
Ending balance	$	72,000			$	51,200
Total stockholders' equity	$	155,200			$	128,000
Total liabilities and stockholders' equity	$	263,200			$	252,000

Required:

1. Calculate 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). Because the retained earnings section of the balance sheet is, in and of itself, an analysis of the change in the retained earnings account for the month, the row for net income and dividends should be entered as the February amount and not the change. 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.
2. Prepare a statement of cash flows that explains above changes?

Answer 1

Part-1- Showing Changes
Millco Inc.
Balance Sheet
	28-Feb	31-Jan	Change
Assets
Cash	$33,600	$29,600	$4,000
Accounts Receivables	$51,200	$42,400	$8,800
Merchandise Inventory	$64,800	$75,200	-$10,400
Total Current Assets	$149,600	$147,200	$2,400
Plant And Equipment
Production Equipment	$132,800	$121,600	$11,200
Less: Accumulated Depreciation	-$19,200	-$16,800	-$2,400
Total Assets	$263,200	$252,000	$11,200
Liabilities
Accounts Payable	$29,600	$32,800	-$3,200
Short Term Debt	$35,200	$35,200	$0
Other Accrued Liabilities	$16,800	$19,200	-$2,400
Total Current Liabilities	$81,600	$87,200	-$5,600
Long -Term Debt	$26,400	$36,800	-$10,400
Total Liabilities	$108,000	$124,000	-$16,000
Stock Holder's Equity
Common Stock	$83,200	$76,800	$6,400
Retained Earning
Beginning Balance	$51,200	$34,400	$16,800
Net Income For Month	$28,800	$23,200	$5,600
Dividend	-$8,000	-$6,400	-$1,600
Ending Balance	$72,000	$51,200	$20,800
Total Stockholder's Equity	$155,200	$128,000	$27,200
Total Liabilities And Stockholder’s Equity	$263,200	$252,000	$11,200
Millco Inc.
Statement of Cash flow
Cash Flow From Operating Activity
Net Income		$28,800.00
Depreciation	$2,400.00
Increase In Accounts Receivable	-$8,800.00
Decrease In Inventory	$10,400.00
Decrease In Accounts Payable	-$3,200.00
Decrease In Other Accrued Liabilities	-$2,400.00	-$1,600.00
Net Cash Flow From Operating Activity		$27,200.00
Cash Flow From Investing Activity
Purchase Of Plant And Equipment	-$11,200.00
Net Cash Flow From Investing   Activity		-$11,200.00
Cash Flow From Financing Activity
Issued Of Common stock	$6,400.00
Paid Long Term Debt	-$10,400.00
Dividend Paid	-$8,000.00
Net Cash Flow From Financing Activity		-$12,000.00
Cash Change during the year		$4,000.00
Begining Cash Balance		$29,600.00
Ending Cash Balance		$33,600.00