Following are comparative balance sheets for Millco, Inc., at January 31 and February 28, 2014: MILLCO, INC. Balance Sheets February 28 and January 31, 2014 Assets Cash Accounts receivable Merchandise inventory February 28 January 31 $ 58,800 $ 51,800 89,600 74.200 113,400 131,600 Total current assets Plant and equipment: Production equipment Less: Accumulated depreciation $ 261,800 232,400 (33,600) $ 460,600 $ 257,600 212,800 (29,400) $ 441,000 Total assets Liabilities Accounts payable Short-term debt Other accrued liabilities $ 51,800 61,600 29,400 $ 57,400 61,600 33,600 Total current liabilities Long-term debt $ 142,800 46,200 $ 152,600 64,400 Total liabilities $ 189,000 $ 217,000 $ 145,600 $ 134,400 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 $ 89,600 50,400 (14,000) $ 60,200 40,600 (11,200) Ending balance $ 126,000 $ 89,600 Stockholders' Equity $ 271,600 $ 460,600 $ 224,000 $441,000 Total liabilities and owners' equity Burad 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). (Hints: What is the purpose of the statement of cash flows? How is this purpose accomplished?) 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. . 81 OP T MILLCO, INC. Balance Sheets January 31 and February 28, 2014 Assets February 28 January 31 Cash $ 58,800 $ 51,800 Accounts receivable 89,600 74.2002 Merchandise inventory 113,400 131,600 Total current assets 261,800 $ 257,600 Plant and equipment: Production equipment 232,400 212,800 Less: Accumulated depreciation (33,600) (29,400) Total assets $ 460,600 $ 441,000 Liabilities Accounts payable 51,800 $ 57,400 Short-term debt 61,600 61,600 Other accrued liabilities 29,400 33,600 Total current liabilities $ 142,800 $ 152,600 Long-term debt 4 6,200 64,400 Total liabilities $ 189,000 $ 217,000 Stockholders' Equity Common stock, no par value, 56000 shares authorized, 42000 and 39200 shares issued, $ 145,600 $ 134,400 respectively Retained earnings: Beginning balance $ 89,600 $ 60,200 Net income for month 50,400 40,600 Dividends (14,000) (11.200) Ending balance $ 126,000 $ 89,600 Total stockholders' equity $ 271,600 S 224,000 Total liabilities and stockholders' equity $ 460,600 $ 441,000 OTT LITT IL b. Prepare a statement of cash flows that explains above changes? (Amounts to be deducted should be indicated by minus sign.) MILLCO, INC Statement of Cash Flows For the Month Ended February 28, 2014 Cash flows from operating activities: - Add (deduct) items not affecting cash: / / / / Cash flows from investing activities: Cash flows from financing activities