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 $ 54,100 Accounts receivable, net 13,400 Inventory 120,100 Total current assets 187,600 Equipment 66,500 Accum. depreciation-Equipment (30,100) Total assets $ 224,000 Liabilities and Equity Accounts payable $ 32,000 Salaries payable 600 Total current liabilities 32,600 Equity Common stock, no par value 159,800 Retained earnings 31,600 Total liabilities and equity $ 224,000 $ 54,200 16,400 94,800 165,400 56,100 (20,700) $ 200,800 $ 34,400 800 35,200 148, 200 17,400 $ 200,800 MONTGOMERY INC. Income Statement For Current Year Ended December 31 Sales $ 60,900 Cost of goods sold (25,300) Gross profit 35,600 Operating expenses Depreciation expense $ 9,400 Other expenses 7,500 Total operating expense 16,900 Income before taxes 18,700 Income tax expense 4,500 Net income $ 14,200 Additional Information on Current-Year Transactions a. No dividends are declared or paid. b. Issued additional stock for $11,600 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.) 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 0 $ $ 0 Cash balance at beginning of year Cash balance at end of year CA 0