Question

Following are comparative balance sheets for Millco, Inc., atJanuary 31 and February 28, 2011:

MILLCO, INC. Balance Sheets February 28 and January 31, 2011
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
Accounts payable	$	37,000		$	41,000
Short-term debt		44,000			44,000
Other accrued liabilities		21,000			24,000
Total current liabilities	$	102,000		$	109,000
Long-term debt		33,000			46,000
Total liabilities	$	135,000		$	155,000
Owners' Equity
Common stock, no par value, 40,000 shares authorized, 30,000 and28,000 shares issued, respectively	$	104,000		$	96,000
Retained earnings:
Beginning balance	$	64,000		$	43,000
Netincome for month		36,000			29,000
Dividends		(10,000	)		(8,000)
Ending balance	$	90,000		$	64,000
Total owners' equity	$	194,000		$	160,000
Total liabilities and owners' equity	$	329,000		$	315,000

Required:

(a)

Calculate the change that occurredin cash during the month. You may assume that the change in eachbalance sheet amount is due to a single event (for example, thechange in the amount of production equipment is not the result ofboth a purchase and sale of equipment). (Hints: What is thepurpose of the statement of cash flows? How is this purposeaccomplished?) Because the retained earnings section of thebalance sheet is, in and of itself, an analysis of the change inthe retained earnings account for the month, the row for net incomeand dividends should be entered as the February amount and not thechange. Use the space to the right of the January 31 data to enterthe difference between the February 28 and January 31 amounts ofeach balance sheet item. (Negative amount should beindicated by a minus sign. Leave no cells blank - be certain toenter "0" wherever required.Omit the "$" sign in yourresponse.)

MILLCO, INC. Balance Sheets February 28 and January 31, 2011
Assets	February 28			January 31			Change
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:
Accounts payable	$	37,000		$	41,000
Short-term debt		44,000			44,000
Other accrued liabilities		21,000			24,000
Total current liabilities	$	102,000		$	109,000
Long-term debt		33,000			46,000
Total liabilities	$	135,000		$	155,000
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
Netincome for month		36,000			29,000
Dividends		(10,000	)		(8,000	)
Ending balance	$	90,000		$	64,000
Total owners' equity	$	194,000		$	160,000
Total liabilities and owners' equity	$	329,000		$	315,000

(b)	Prepare a statement of cash flowsthat explains above changes? (Negative amount should beindicated by a minus sign.Omit the "$" sign in yourresponse.)

MILLCO, INC. Statement of Cash Flows For the Month Ended February 28, 2011
Cashflows from operating activities:
Netincome	$
Add(deduct) items not affecting cash:
depreciation expense
decrease in merchendise inventory
increase in accounts recievable
decrease in other accured liabilities
decrease in accounts payable
Netcash provided by operating activities		$
Cashflows from investing activities:
Purchases of production equipment
Cashflows from financing activities:
saleof common stock	$
payment of long term debt
payment of divedends
Netcash flows used by financing activities
Netincrease in cash for the year		$