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Prior Year MONTGOMERY INC. Comparative Balance Sheets December 31 Current Year Assets Cash $ 33,200 Accounts receivable, net 12,100 Inventory 108,500 Total current assets 153,800 Equipment 60,100 Accum. depreciation-Equipment (27,100) Total assets $186,800 Liabilities and Equity Accounts payable $ 28,800 Salaries payable 600 Total current liabilities 29,400 Equity Common stock, no par value 130,000 Retained earnings 27,400 Total liabilities and equity $186,800 $ 33,400 14,700 84,900 133,000 50,200 (18,500) $164,700 $ 30,700 700 31,400 118,100 15,200 $164,700 MONTGOMERY INC. Income Statement For Current Year Ended December 31 Sales $ 53,500 Cost of goods sold (22,200) Gross profit 31,300 Onerating exnenses MONTGOMERY INC. Income Statement For Current Year Ended December 31 Sales $ 53,500 Cost of goods sold (22,200) Gross profit 31,300 Operating expenses Depreciation expense $ 8,600 other expenses 6,600 Total operating expense 15,200 Income before taxes 16,100 Income tax expense 3,900 Net income $ 12,200 Additional Information on Current-Year Transactions a. No dividends are declared or paid. b. Issued additional stock for $11,900 cash. c. Purchased equipment for cash; no equipment was sold. 1. Use the above information to prepare a statement of cash flows for the current year using the indirect deducted should be indicated by a minus sign.) MONTGOMERY, INC. Statement of Cash Flows (Indirect Method) For Current Year Ended December 31 Cash flows from operating activities Net income 12,000 Adjustments to reconcile net income to net cash provided by operations: Income statement items not affecting cash Depreciation expense 8,600 Changes in current operating assets and liabilities Decrease in accounts receivable Increase in inventory Changes in current operating assets and liabilities Decrease in accounts receivable Increase in inventory Decrease in accounts payable Decrease in salaries payable (900) $ 19,700 Cash flows from investing activities Cash paid for equipment Cash flows from financing activities $ 0 Cash received from stock issuance Net cash provided by financing activities Net decrease in cash Cash balance at beginning of year Cash balance at end of year $ $ 0 19,700 $ 19,700