Question

un Balance Sheets February 28 and January 31, 2020 February 28 January 31 $ 42,000 64,000 81,000 $ 187,000 $ 37,000 53,000 94,000 $184,000 166,000 (24,000) $329,000 152,000 (21,000 $315,000 Assets Cash Accounts receivable Merchandise inventory Total current assets Plant and equipment: Production equipment Less: Accumulated depreciation Total assets Liabilities Accounts payable Short-term debt Other accrued liabilities Total current liabilities Long-term debt Total liabilities Stockholders' Equity Common stock, no par value, 40,000 shares authorized, 30,000 and 28,000 shares issued, respectively Retained earnings: Beginning balance Net income for month Dividends Ending balance Total stockholders' equity Total liabilities and stockholders' equity $ 37,000 44,000 21,000 $102,000 33,000 $135,000 $ 41,000 44,000 24,000 $109,000 46,000 $ 155,000 $104,000 $ 96,000 $ 64,000 36,000 (10,000) $ 90,000 $ 194,000 $329,000 $ 43,000 29,000 (8,000) $ 64,000 $160,000 $315,000 Required: a. 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. b. Prepare a statement of cash flows that explains above changes?

Answer 1

Cashflow Indirect Statement Assets Cash Accounts Receivable Merchandise Inventory Total Current Assets Plant & Equipment Production Equipment Less: Accumulated Depreciation Total Assets 28-Feb 42,000 64,000 81,000 187,000 31-Jan Change 37,000 5,000 53,000 11,000 94,000 (13,000) 184,000 166,000 (24,000) 329,000 152,000 (21,000) 315,000 14,000 (3,000) (4,000) (3,000) 37,000 44,000 21,000 102,000 33,000 135,000 41,000 44,000 24,000 109,000 46,000 155,000 (13,000) Liabilities Accounts Payable Short term Debt Other accrued liabilities Total Current Liabilities Long term Debt Total Liabilities Stockholders Equity Common Stock Retained Earnings Beginning Balance Net income for the month Dividends Ending Balance Total Stockholders Equity Total Liabilities & Stockholders Equity 104,000 96,000 8,000 36,000 (10,000) 64,000 36,000 (10,000) 90,000 194,000 329,000 43,000 29,000 (8,000) 64,000 160,000 315,000

Statement of Cashflows
Cash flows from Operating Activities
Net income	36,000
Increase in Accounts Receivable	(11,000)
Decrease in Merchandise Inventory	13,000
Decrease in Accounts Payable	(4,000)
Decrease in Other accrued liabilities	(3,000)
Depreciation expense	3,000
Net Cash Provided/(Used) by Operating Activities		34,000
Cash flows from Investing Activities
Payment to purchase equipment	(14,000)
Net Cash Provided/(Used) by Investing Activities		(14,000)
Cash flows from Financing Activities
Payment on long term debt	(13,000)
Proceeds from issue of common stock	8,000
Payment of cash Dividends	(10,000)
Net Cash Provided/(Used) by Financing Activities		(15,000)
Net Increase (decrease) in Cash		5,000
Cash balance at Beginning of Year		37,000
Cash balance at End of Year		42,000