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Exercise 12-13 (Static) Indirect: Preparing statement of cash flows LO P2, P3 Prior Year MONTGOMERY INCORPORATED Comparative Balance Sheets At December 31 Current Year Assets Cash $ 30,400 Accounts receivable, net 10,050 Inventory 90, 100 Total current assets 130,550 Equipment 49,900 Accumulated depreciation-Equipment (22,500) Total assets $ 157,950 Liabilities and Equity Accounts payable $ 23,900 Salaries payable 500 Total current liabilities 24,400 Equity Common stock, no par value 110,000 Retained earnings 23,550 Total liabilities and equity $ 157,950 $ 30,550 12,150 70,150 112,850 41,500 (15,300) $ 139,050 $ 25,400 600 26,000 100,000 13,050 $ 139,050 MONTGOMERY INCORPORATED Income Statement For Current Year Ended December 31 Sales $ 45,575 Cost of goods sold (18,950) Gross profit 26,625 Salaries expense 5,550 Depreciation expense 7,200 Income before taxes 13,875 Income tax expense 3,375 Net income $ 10,500 Additional Information on Current-Year Transactions a. No dividends are declared or paid. b. Issued additional stock for $10,000 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 method. (Amounts to be deducted should be indicated by a minus sign.) MONTGOMERY, INCORPORATED Statement of Cash Flows (Indirect Method) For Current Year Ended December 31 Cash flows from operating activities Adjustments to reconcile net income to net cash used in operating activities: Income statement items not affecting cash Changes in current operating assets and liabilities Cash flows from investing activities Cash flows from investing activities Cash flows from financing activities Cash balance at beginning of year Cash balance at end of year