MONTGOMERY INC. Comparative Balance Sheets December 31 Assets Cash Accounts receivable, net Inventory Total current assets Equipment Accum. depreciation-Equipment Total assets Liabilities and Equity Accounts payable Salaries payable Total current liabilities Equity Common stock, no par value Retained earnings Total liabilities and equity MONTGOMERY INC. Income Statement For Current Year Ended December 31 Sales Cost of goods sold Gross profit Operating expenses Depreciation expense Other expenses Total operating expense Income before taxes Income tax expense Net income Current Year) Prior Year $ 63,500 $ 63,900 18,100 22,100 162,300 127,700 243,900 213,700 89,900 (40,500) $293,300 $ 43,100 800 75,600 (28,000) $261,300 $ 46,500 1,000 47,500 43,900 210,000 192,000 39,400 $293,300 21,800 $261,300 $ 77,200 (32,100) 45,100 $12,500 9,400 21,900 23,200 5,600 $ 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 Net income $ 17,600 Adjustments to reconcile net income to net cash provided by operations Income statement items not affecting cash Depreciation expense Changes in current operating assets and liabilities. Decrease in accounts receivable Increase in inventory Decrease in salaries payable Decrease in accounts payable 12,500 4,000 (34,600) (3,400) (200)