Prior Year 7 MONTGOMERY INC. Comparative Balance Sheets December 31 Current Year Assets Cash $ 30,800 Accounts receivable, net 8,900 Inventory 79,800 Total current assets 119,500 Equipment 44,200 Accum. depreciation-Equipment (19,900) Total assets $143,800 Liabilities and Equity Accounts payable $ 21,200 Salaries payable 400 Total current liabilities 21,680 Equity Common stock, no par value 102,400 Retained earnings 19,800 Total liabilities and equity $143,800 $ 31,000 10,900 63,000 104,900 37,300 (13,800) $128,400 $ 22,900 500 23,400 94, 100 10,900 $128, 400 ) nces MONTGOMERY INC. Income Statement For Current Year Ended December 31 Sales $ 38,500 Cost of goods sold (16,000) Gross profit 22,500 Operating expenses Depreciation expense $ 6,100 Other expenses 4,700 Total operating expense 10,800 Income before taxes 11,700 Income tax expense 2,800 Net income $ 8,900 Additional Information on Current-Year Transactions 480 21,600 500 23,400 Salaries payable Total current liabilities Equity Common stock, no par value Retained earnings Total liabilities and equity 102,400 19,800 $143,800 94,100 10,900 $128,400 MONTGOMERY INC. Income Statement For Current Year Ended December 31 Sales $ 38,500 Cost of goods sold (16,000) Gross profit 22,500 Operating expenses Depreciation expense $ 6,100 Other expenses 4,700 Total operating expense 10,800 Income before taxes 11,700 Income tax expense 2.800 Net income $ 8,900 Additional Information on Current-Year Transactions a. No dividends are declared or paid b. Issued additional stock for $8,300 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 MONTGOMERY, INC. Statement of Cash Flows (Indirect Method) For Current Year Ended December 31 Cash flows from operating activities Net income 8,900 Adjustments to reconcile net income to net cash provided by operations: Income statement items not affecting cash Increase in accounts payable Increase in salaries payable Changes in current operating assets and liabilities Decrease in accounts receivable Decrease in accounts payable Cash paid for equipment Increase in inventory Decrease in accounts payable Decrease in salaries payable Net cash provided by operating activities $ Cash flows from investing activities Cash paid for equipment Increase in salaries payable Net cash provided by investing activities $ Cash flows from financing activities Increase in salaries payable Cash received from stock issuance Net cash provided by financing activities $ Net decrease in cash $ Cash balance at beginning of year Cash balance at end of year 8,900 0 0 8,900 $ 8,900
