Question

Following are comparative balance sheets for Millico Inc. at January 31 and February 28, 2020 February 28 January 31 $ 58,00 89,600 113.400 $261, see $ 51,00 74,200 131,600 $257,600 232,400 (33,600) 5460,600 212.00 (29,400) $441,000 MILLCO INC. Balance Sheets February 28 and January 31, 2020 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, 56,000 shares authorized, 42,000 and 39,200 shares issued, respectively Retained earnings Beginning balance Net Income for month Dividends Ending balance Total stockholders' equity Total liabilities and stockholders' equity $ 51,00 61.600 29,400 $142.800 46,200 $189.000 $ 57.400 61.60 33.0 $152,600 $217.000 $145,6 $134,400 S60,200 40. $89.600 se, 400 (14.00) 5126,00 $271,600 0.00 0 . 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? 04 < Prey 3 of 6 Next >

Answer 1

Requirement A:

HOEMAN INC.
Comparative Balance sheet
For the Year Ended December 31,2020
	February 28	January 31	Change
Assets:
Currenta assets:
Cash	$58,800	$51,800	$7,000
Accounts receivable	$89,600	$74,200	$15,400
Merchandise Inventory	$113,400	$131,600	($18,200)
Total current assets	$261,800	$257,600
Plant and equipment:
Production equipment	$232,400	$212,800	$19,600
Less: Accumulated depreciation	($33,600)	($29,400)	($4,200)
Total assets	$460,600	$441,000
Liabilities:
Accounts payable	$51,800	$57,400	($5,600)
Short-term debt	$61,600	$61,600	$0
Other accrued liabilities	$29,400	$33,600	($4,200)
Total current liabilities	$142,800	$152,600
Long-term debt	$46,200	$64,400	($18,200)
Total liabilities	$189,000	$217,000
Stockholders' equity:
Common stock	$145,600	$134,400	$11,200
Retained earnings
Beginning balance	$89,600	$60,200
Net income for month	$50,400	$40,600	$9,800
Dividends	($14,000)	($11,200)	($2,800)
Ending balance	$126,000	$89,600
Total stockholders' equity	$271,600	$224,000
Total liabilities and stockholders' equity	$460,600	$441,000

Requirement B:

HOEMAN INC.
Statement of Cash flows
For the Year Ended December 31,2020
Cash flows from operating activities:
Net income	$50,400
Add(deduct) items not affecting cash:
Depreciation expense	$4,200
Increase in accounts receivable	($15,400)
Decrease in inventory	$18,200
Decrease in accounts payable	($5,600)
Decrease in other current liabilities	($4,200)
Net cash provided by operating activities		$47,600
Cash flows from investing activities:
Cash paid to acquire equipment	($19,600)
		($19,600)
Net cash provided by investing activities
Cash flows from financing activities:
Payment of cash dividends on common stock	($14,000)
Payment of long-term debt	($18,200)
Cash received from issuance of common stock	$11,200
Net cash provided by financing activities		($21,000)
Net increase(decrease) in cash		$7,000
cash balance, January 1,2020		$51,800
Cash balance, December 31,2020		$58,800