Exercise 12-12 Indirect: Preparing statement of cash flows LO P2, P3 Prior Year MONTGOMERY INC. Comparative Balance Sheets December 31 Current Year Assets Cash $ 55,900 Accounts receivable, net 13, Bee Inventory 123,700 Total current assets 193,400 Equipment 68,500 Accum. depreciation-Equipment (31,200) Total assets $239,900 Liabilities and Equity Accounts payable $ 33,eee Salaries payable bee Total current liabilities 33,600 Equity Common stock, no par value 165,900 Retained earnings 31,400 Total liabilities and equity $ 230,900 $ 56,300 16,800 97, 10e 170,200 57,5ee (21,200) $206, see $ 35, 200 Bee 36, see 153, 100 17,40e $206,500 MONTGOMERY INC. Income Statement For Current Year Ended December 31 Sales $ 61,200 Cost of goods sold (25,400) Gross profit 35, Bee Operating expenses Depreciation expense $ 9,800 Other expenses 7,5ee Total operating expense 17,300 Income before taxes 18,500 Income tax expense 4,5ee Net income $ 14,000 Additional Information on Current-Year Transactions a. No dividends are declared or pald. b. Issued additional stock for $12,800 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 slgn.) 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 financing activities Cash balance at beginning of year Cash balance at end of year