MONTGOMERY INCORPORATED Comparative Balance Sheets At December 31 Current Year Prior Year Assets Cash $ 57,800 $ 57,900 Accounts receivable, net 14,300 17,600 Inventory 128,200 101,700 Total current assets 200,300 177,200 Equipment 71,000 60,200 Accumulated depreciation-Equipment (32,100) (22,200 Total assets $ 239,200 $ 215, 200 Liabilities and Equity Accounts payable $ 34,200 $ 36,900 Salaries payable 600 800 Total current liabilities 34,800 37,700 Equity Common stock, no par value 172,900 160,100 Retained earnings 31,500 17,400 Total liabilities and equity $ 239,200 $ 215,200 MONTGOMERY INCORPORATED Income Statement For Current Year Ended December 31 Sales $ 61,810 Cost of goods sold (25,600) Gross profit 36,200 Salarios expense 7,700 Depreciation expense 9,900 Income before taxes 18,600 Income tax expense 4,500 Net income $ 14,100 Additional Information on Current-Year Transactions Additional Information on Current-Year Transactions a. No dividends are declared or pald. 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, INCORPORATED Statement of Cash Flows (Indirect Method) For Current Year Ended December 31 Cash flows from operating activities Net Income Adjustments to reconcile net income to net cash used in operating activities: Income statement items not affecting cash Changes in current operating assets and liabilities Depreciation expenso Decrease in accounts receivable Increase in inventory Decrease in accounts payable Decrease in salaries payable Changes in current operating assets and liabilities Depreciation expense Decrease in accounts receivable Increase in inventory Decrease in accounts payable Decrease in salaries payable Cash flows from investing activities Cash paid for equipment 0 Cash flows from financing activities $ 0 0 Cash balance at beginning of year Cash balance at end of year $ $ 0 $ 0