2017 MONTGOMERY INC. Comparative Balance Sheets December 31, 2018 and 2017 2018 Assets Cash $ 38,200 Accounts receivable, net 10,800 Inventory 96,800 Total current assets 145,800 Equipment 53,600 Accum. depreciation-Equipment (24,200) Total assets $175,200 Liabilities and Equity Accounts payable $ 25,700 Salaries payable 400 Total current liabilities 26,100 Equity Common stock, no par value 129,300 Retained earnings 19,800 Total liabilities and equity $175,200 $ 38,700 13,400 77,500 129,600 45,800 (16,900). $158,500 25,700 $ 28,100 500 28,600 119,000 10,900 $158,500 MONTGOMERY INC. Income Statement For Year Ended December 31, 2018 Sales $ 40,300 Cost of goods sold (16,700) Gross profit 23,600 Operating expenses Depreciation expense $ 7,300 Other expenses 5,000 Total operating expense 12,300 Income before taxes 11,300 Income tax expense 2,400 Net income $ 8,900 Additional Information a. No dividends are declared or paid in 2018 b. Issued additional stock for $10,300 cash in 2018. c. Purchased equipment for cash in 2018, no equipment was sold in 2018 1. Use the above financial statements and additional information to prepare a statement of cash flows for the year ended December 31 2018, using the indirect method (Amounts to be deducted should be indicated by a minus sign.) MONTGOMERY, INC. Statement of Cash Flows (Indirect Method) For Year Ended December 31, 2018 Net Income $ 8,900 Adjustments to reconcile net income to net cash provided by operations: Income statement items not affecting cash 2,400 Depreciation expense 7,300 Changes in current operating assets and liabilities Decrease in accounts receivable 2,600 Increase in inventory (19,300) Decrease in accounts payable (2,400) Decrease in salaries payable (100) Depreciation expense 7.300 $ 6,700 Cash flows from investing activities Cash paid for equipment (7,800) $ (7,800) Cash flows from financing activities Cash received from stock issuance 10,300 een Cash balance at beginning of year Cash balance at end of year 10,300 9,200 38,700 47,900 $ $