Exercise 12-12 Indirect: Preparing statement of cash flows LO P2, P3

MONTGOMERY INC. Comparative Balance Sheets December 31
	Current Year						Prior Year
Assets
Cash		$	55,600					$	55,900
Accounts receivable, net			12,500						15,400
Inventory			112,100						89,000
Total current assets			180,200						160,300
Equipment			62,100						52,700
Accum. depreciationEquipment			(28,100	)					(19,400	)
Total assets		$	214,200					$	193,600
Liabilities and Equity
Accounts payable		$	29,900					$	32,200
Salaries payable			500						700
Total current liabilities			30,400						32,900
Equity
Common stock, no par value			156,300						145,500
Retained earnings			27,500						15,200
Total liabilities and equity		$	214,200					$	193,600

MONTGOMERY INC. Income Statement For Current Year Ended December 31
Sales				$	54,000
Cost of goods sold					(22,400	)
Gross profit					31,600
Operating expenses
Depreciation expense	$	8,700
Other expenses		6,700
Total operating expense					15,400
Income before taxes					16,200
Income tax expense					3,900
Net income				$	12,300

Additional Information on Current-Year Transactions

1. No dividends are declared or paid.
2. Issued additional stock for $10,800 cash.
3. 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 $ 0 Cash flows from financing activities $ 699 0 Cash balance at beginning of year Cash balance at end of year CA 0