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Statement of cash flows for Branco using indirect method

Prepare statement of cash flows (indirect method) using balance sheet data. Presented
below are comparative balance sheets for Branco, Inc., at January 31 and February 28, 2004. Please provide simple step by step explanations.

BRANCO, INC.
Balance Sheets
February 28 and January 31, 2004

February 28, 2004 January 31, 2004
Assets
Cash $52,000 $30,000
Accounts receivable 40,000 53,000
Merchandise inventory 85,000 94,000
Total current assets $177,000 $177,000
Plant and equipment:
Production equipment 166,000 152,000
Less: Accumulated depreciation (30,000) (21,000)
Total assets $313,000 $308,000

Liabilities
Short-term debt $54,000 $44,000
Accounts payable 41,000 41,000
Other accrued liabilities 24,000 24,000
Total current liabilities $119,000 $109,000

Long-term debt 27,000 39,000
Total liabilities $146,000 $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 9,000 29,000
Dividends (10,000) (8,000)
Ending balance $63,000 $64,000
Total owners' equity $167,000 $160,000
Total liabilities and owners' equity $ 313,000 $ 308,000

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

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BRANCO INC
Cash Flow Statement
For the month of February 2004

Cash Flow from Operating Activity Operating activity relates to changes in working capital
Net Income 9,000
Add: Depreciation 9,000 Depreciation is non cash and so is added and is calculated as change in accumulated depreciation
Add: ...

Solution Summary

The solution explains how to make the statement of cash flows for Branco Inc using the indirect method

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