Exercise 12-12 Indirect: Preparing statement of cash flows LO P2, P3 MONTGOMERY INC. Comparative Balance Sheets December 31 Current Year Assets Cash $ 60,100 Accounts receivable, net 19,800 Inventory 177,500 Total current assets 257,400 Equipment 98,300 Accum. depreciation-Equipment ( 44,300) Total assets $311,400 Liabilities and Equity Accounts payable $ 47, 100 Salaries payable 1,000 Total current liabilities 48, 100 Equity Common stock, no par value 216,100 Retained earnings 47,200 Total liabilities and equity $311,400 Prior Year $ 60,000 23,900 138,000 221,900 81,600 (30, 100) $273,400 $ 50,000 1,200 51,200 196,100 26,100 $273,400 MONTGOMERY INC. Income Statement For Current Year Ended December 31 Sales $ 90,900 Cost of goods sold (37,800) Gross profit 53,100 Operating expenses Depreciation expense $14,200 Other expenses 11,100 Total operating expense 25,300 Income before taxes 27,800 Income tax expense 6,700 Net income $ 21,100 Additional Information on Current-Year Transactions a. No dividends are declared or paid. b. Issued additional stock for $20,000 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 Cash flows from investing activities Cash flows from financing activities Cash balance at beginning of year Cash balance at end of year