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Statement of Cash Flows using Indirect Method Balance Sheet

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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

Short-term debt 44,000 44,000
Accounts payable 37,000 41,000
Other accrued liabilities 21,000 24,000

Total current liablities 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
Dividends (10,000) (8,000)

Ending balance $90,000 $64,000

Total owner's equity $194,000 $160,000

Total liablities and owoner's equity $329,000 $315,000

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Solution Summary

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

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Cash flow statement is in three parts - Cash from Operating Activity, Investing and Financing Activity. Operating activity consists of Net ...

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