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 $ 57,800 Accounts receivable, net 14,300 Inventory 128,200 Total current assets 200, 300 Equipment 71,000 Accum. depreciation-Equipment (32,100) Total assets $239,200 Liabilities and Equity Accounts payable $ 34,200 Salaries payable 600 Total current liabilities 34,800 Equity Common stock, no par value 172,900 Retained earnings 31,500 Total liabilities and equity $239,200 $ 57,900 17,600 101,700 177,200 60,200 (22,200) $215, 200 $ 36,900 800 37,700 160,100 17,400 $215,200 MONTGOMERY INC. Income Statement For Current Year Ended December 31 Sales $ 61,800 Cost of goods sold (25,600) Gross profit 36,200 Operating expenses Depreciation expense $ 9,900 Other expenses 7,700 Total operating expense 17,600 Income before taxes 18,600 Income tax expense 4,500 Net income $ 14,100 Additional Information on Current-Year Transactions a. No dividends are declared or paid. b. Issued additional stock for $12,800 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 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 $ 0