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 $ 63,500 Accounts receivable, net 18,100 Inventory 162,300 Total current assets 243,900 Equipment 89,900 Accum. depreciation-Equipment (40,500) Total assets $293,300 Liabilities and Equity Accounts payable $ 43, 100 Salaries payable 800 Total current liabilities 43,900 Equity Common stock, no par value 210,000 Retained earnings 39,400 Total liabilities and equity $293,300 $ 63,900 22,100 127,700 213,700 75,600 (28,000) $261,300 $ 46,500 1,000 47,500 192,000 21,800 $261,300 MONTGOMERY INC. Income Statement For Current Year Ended December 31 Sales $ 77,200 Cost of goods sold (32,100) Gross profit 45, 100 Operating expenses Depreciation expense $12,500 Other expenses 9,400 Total operating expense 21,900 Income before taxes 23,200 Income tax expense 5,600 Net income $ 17,600 Additional Information on Current-Year Transactions a. No dividends are declared or paid. b. Issued additional stock for $18,000 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 $ 0 $ 0 Cash balance at beginning of year Cash balance at end of year $