Assets Cash MONTGOMERY INC. Comparative Balance Sheets December 31 Accounts receivable, net Inventory Total current assets Equipment Accum. depreciation-Equipment Total assets Liabilities and Equity Accounts payable Current Year Prior Year $ 53,800 $ 53,900 13,400 16,400 120,100 94,800 187,300 165,100 66,500 56,100 (30,100) $223,700 $ 32,000 (20,700) $200,500 $ 34,400 Salaries payable Total current liabilities Equity 600 32,600 800 35,200 Common stock, no par value 159,400 147,900 Retained earnings 31,700 17,400 Total liabilities and equity $223,700 $200,500 Sales MONTGOMERY INC. Income Statement For Current Year Ended December 31 Cost of goods sold Gross profit $ 60,900 (25,300) 35,600 Operating expenses Depreciation expense Other expenses Total operating expense Income before taxes Income tax expense Net income $ 9,400 7,400 16,800 18,800 4,500 $ 14,300 Additional Information on Current-Year Transactions a. No dividends are declared or paid. b. Issued additional stock for $11,500 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, INC. 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 provided by operations: 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 0 Cash balance at beginning of year Cash balance at end of year