Exercise 16-12 Indirect: Preparing statement of cash flows LO P2, P3

Exercise 16-12 Indirect: Preparing statement of cash flows LO P2, P3 Prior Year MONTGOMERY INC. Comparative Balance Sheets December 31 Current Year Assets Cash $ 30,400 Accounts receivable, net 10,050 Inventory 90,100 Total current assets 130,550 Equipment 49,900 Accum. depreciation-Equipment (22,500) Total assets $157,950 Liabilities and Equity Accounts payable $ 23,900 Salaries payable 500 Total current liabilities 24,400 Equity Common stock, no par value 10,000 Retained earnings 23,552 Total liabilities and equity $157,950 $ 30,550 12,150 70,150 112,850 41,500 (15,300) $139,050 $ 25,400 600 26,000 100,000 13,050 $139,050 MONTGOMERY INC. Income Statement For Current Year Ended December 31 Sales $ 45,575 Cost of goods sold (18,950) Gross profit 26,625 Operating expenses Depreciation expense Other expenses Total operating expense 12.750 Income before taxes Income tax expense Net income $ 1e 580 7.200 Additional Information on Current-Year Transactions a. No dividends are declared or paid. b. Issued additional stock for $10.000 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.) Cash flows from operating activities Net income s 10,500 Adjustments to reconcile net income to net cash provided by operations: Income statement items not affecting cash Depreciation expense DELETE Changes in current operating assets and liabilities 10.500 Cash flows from investing activities Cash flows from financing activitie 3 10.500 Dash ba ance at beginning of yea Gash ba ang at end of years