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Cash flow statement

Prepare statement of cash flows -indirect method
The comparative balance sheets at January 31 and February 28, 2004

Balance Sheets
February 28 and January 31, 2004

February 28, 2004 January 31, 2004
Assets
Cash $42,000 $30,000
Accounts receivable 36,000 53,000
Merchandise inventory 81,000 94,000
Total current assets $159,000 $177,000
Plant and equipment:
Production equipment 166,000 152,000
Less: Accumulated depreciation (30,000) (21,000)
Total assets $295,000 $308,000

Liabilities
Short-term debt $54,000 $44,000
Accounts payable 37,000 41,000
Other accrued liabilities 14,000 24,000
Total current liabilities $105,000 $109,000

Long-term debt 27,000 39,000
Total liabilities $132,000 $148,000
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 5,000 29,000
Dividends (10,000) (8,000)
Ending balance $59,000 $64,000
Total owners' equity $163,000 $160,000
Total liabilities and owners' equity $ 295,000 $ 308,000

Required:
Prepare a statement of cash flows using the indirect method

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Balance Sheets
January 31 and February 28, 2004

Assets: 28-Feb 31-Jan Change
Cash 42,000 30,000 12,000
Accounts receivable 36,000 53,000 (17,000)
Merchandise inventory 81,000 94,000 (13,000)
Total current assets 159,000 177,000
Plant and Equipment:
Production equipment 166,000 152,000 14,000
Less: Accumulated depreciation (30,000) (21,000) (9,000)
Total assets 295,000 308,000

Liabilities: 28-Feb 31-Jan Change
Accounts payable 37,000 41,000 ...

Solution Summary

The solution explains the preparation of a statement of cash flows using the indirect method

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