are statement of cash flows indirect method using balance sh

are statement of cash flows (indirect method) using balance sheet Following are comparative balance sheets for Millco, Inc., at January 31 and Lo 1 Prep February 28, 2017: MILLCO, INC Balance Sheets February 28 and January 31, 2017 February 28 January 31 Assets Cash. $126.000 $111,000 159,000 282,000 ....$561,000 $552,000 Plant and equipment: Production equipment... 456,000 (63,000) $945,000 498,000 ....(T2,000) Total assets. . . Liabilities Accounts payable. Short-term debt . $987,000 $111,000 $123,000 132,000 72,000 $306,000 $327,000 138,000 $405,000 $465,000 ...132,000 63,000 99,000 Stockholders\' Equity Common stock, no par value, 80,000 shares authorized, 60,000 and 56,000 shares issued, respectively Retained earnings: $312.000 $288.000 nnin $192,000 $129,000 87,000 (24,000) 108,000 (30,000) $270,000 $192,000 $582,000 $480,000 $987,000 $45,000 Ending balance .. Total stockholders\' equity

Solution

Statement of cash flows (Indirect method)

for the month ended 28th Feb,2017

Cash flow from operating activity

Net income 108000

Add: Depreciation [72000-63000]    9000

117000

Increase in Accounts receivables (33000)

decrease in merchandise inventory 39000

decrease in accounts payable (12000)

decrease in other accrued liabilities (9000)

Net Cash provided by operating activity 102000

Cash flow from investing activity

purchase of production equipment (42000)

Net Cash used by investing activity (42000)

Cash flow from financing activity

proceed from common stock 24000

Payment of long term debt (39000)

Dividend paid    (30000)

Net Cash used by financing activity (45000)

Net increase in cash 15000

Add: Cash in beginning    111000

Cash at end $126000

Purpose of cash flow statement : Cash flow statement provides information of total cash inflow and total cash outflow related to operating, investing and financing activities of a company during a particular period.

accomplishment of cash flow purpose : Cash flow statement purpose is accomplished when the total cash is inflowing into a company faster than its total cash outflow,that means company is generating more cash than paying.