CH 12 #4

Exercise 12-12 Indirect: Preparing statement of cash flows LO P2, P3 2 MONTGOMERY INC. pmnm Comparative Balance Sheets December 31 Current Year Prior Year Assets El Cash $ 64,000 $ 64,600 _' Accounts receivable, net 13,700 23,100 93%" Inventory 167,600 133,500 Total current assets 250,300 221,200 ii Equipment 92,800 79,000 Pnl Accum. depreciationEquipment (42,000) (29,100) Total assets 5301;100 5271:100 Liabilities and Equity E3 Accounts payable 5 44,700 $ 43,400 Rexences Salaries payable 800 1,000 Total current liabilities 45,500 49,400 Equity Common stock, no par value 216,400 199,900 Retained earnings 39,200 21,800 Total liabilities and equity 5301:100 5271:100 MONTGOMERY INC. Income Statement For Current Year Ended December 31 Sales $ 70,000 Cost of goods sold (32,300] Gross profit 45,700 Operating expenses Depreciation expense $12,900 other expenses 9,700 Total operating expense 22,600 Income before taxes 23,100 Income tax expense 5,700 Net income $ 17,400 Additional Information on Current-Year Transactions a. No dividends are declared or paid. b. Issued additional stock for $16,500 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 $ 0 Cash flows from investing activities 0 Cash flows from financing activities o O Cash balance at beginning of year Cash balance at end of year $ 0