Exercise 23-14

Monty Inc., a greeting card company, had the following statements prepared as of December 31, 2017.

MONTY INC.

COMPARATIVE BALANCE SHEET

AS OF DECEMBER 31, 2017 AND 2016

12/31/17

12/31/16

Cash$6,100

$7,100

Accounts receivable61,500

51,000

Short-term debt investments (available-for-sale)34,800

17,900

Inventory39,800

59,900

Prepaid rent5,000

4,000

Equipment155,200

129,900

Accumulated depreciationequipment(35,200

)

(24,800

)

Copyrights45,800

49,800

Total assets$313,000

$294,800

Accounts payable$45,800

$39,800

Income taxes payable4,100

6,000

Salaries and wages payable7,900

3,900

Short-term loans payable8,000

9,900

Long-term loans payable60,100

68,900

Common stock, $10 par100,000

100,000

Contributed capital, common stock30,000

30,000

Retained earnings57,100

36,300

Total liabilities & stockholders' equity$313,000

$294,800

MONTY INC.

INCOME STATEMENT

FOR THE YEAR ENDING DECEMBER 31, 2017

Sales revenue$338,200

Cost of goods sold174,500

Gross profit163,700

Operating expenses120,800

Operating income42,900

Interest expense$11,400

Gain on sale of equipment2,000

9,400

Income before tax33,500

Income tax expense6,700

Net income$26,800

Additional information:

1.Dividends in the amount of $6,000were declared and paid during 2017.2.Depreciation expense and amortization expense are included in operating expenses.3.No unrealized gains or losses have occurred on the investments during the year.4.Equipment that had a cost of $20,200and was 70% depreciated was sold during 2017.

Prepare a statement of cash flows using the indirect method. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)

How do I find the Depreciation Expense?