MONTGOMERY INCORPORATED Comparative Balance Sheets At December 31 Current Year Prior Year Assets Cash $30,400 $30,550 Accounts receivable, net 10,050 12,150 Inventory 90,100 70,150 Total current assets 130,550 112,850 Equipment 49,900 41,500 Accumulated depreciation-Equipment (22,500) (15,300) Total assets $157,950 $139,050 Liabilities and Equity Accounts payable $23,900 $25,400 Salaries payable 500 600 Total current liabilities 24,400 26,000 Equity Common stock, no par value 110,000 100,000 Retained earnings 23,550 Total liabilities and equity $157,950 13,050 $139,050 MONTGOMERY INCORPORATED Income Statement For Current Year Ended December 31 Sales $45,575 Cost of goods sold 18,950 Gross profit Salaries avnance 26,625 550 Question Data Cash Flow Items Graded Worksheet Workbook Statistics C 110,000 100,000 23,550 $157,950 13,050 $139,050 Equity Common stock, no par value Retained earnings Total liabilities and equity MONTGOMERY INCORPORATED Income Statement For Current Year Ended December 31 B 3. 5 Sales 5 Cost of goods sold 7 Gross profit B Salaries expense 9 Depreciation expense 0 Income before taxes 1 Income tax expense 2 Net income 3 $45,575 18,950 26,625 5,550 7,200 13,875 3,375 $10,500 D E F G + 4 Additional Information on Current-Year Transactions 5 a. No dividends are declared or paid. 6 b. Issued additional stock for $10,000 cash. 7 c. Purchased equipment for cash; no equipment was sold. 8 9 Required: 01. Use the above information to prepare a statement of cash flows for the current year using the indirect method. (Also click on the Cash Flow items and Graded Worksheet Tabs below.) 1 12 H H B C D E F G H K 1 2 4 Cash received from stock issuance Use this list for cell referencing with the previous tab as needed. Not every item on this list may be needed. 3 Cash paid for equipment 5 Decrease in accounts payable 6 Decrease in accounts receivable 7 Decrease in inventory 8 Decrease in salaries payable 9 Depreciation expense 0 Increase in accounts payable 11 Increase in accounts receivable 2 Increase in inventory 3 Increase in salaries payable Net income MONTGOMERY, INCORPORATED Statement of Cash Flows (Indirect Method) For Current Year Ended December 31 Cash flows from operating activities $10,500 Adjustments to reconcile net income to net cash used in operating activities: Income statement items not affecting cash depreciation expense 7,200 Changes in current operating assets and liabilities increase in accounts receivable (2,100) decrease in inventory 19,950 increase in accounts payable (1,500) increase in salaries payable Net cash used in operating activities Cash flows from investing activities cash paid for equipment Net cash used in investing activities Cash flows from financing activities cash received from stock issuance (100) ($1,600) 8,400 8,400 10,000 Net cash used in financing activities Net increase in cash 10,000 ($150) Cash balance at beginning of year Cash balance at end of year 30,500 $30,350