Prior Year MONTGOMERY INC. Comparative Balance Sheets December 31 Current Year Assets Cash $ 32,300 Accounts receivable, net 10,600 Inventory 95, 100 Total current assets 138,000 Equipment 52,700 Accum. depreciation-Equipment (23,800 Total assets $166,900 Liabilities and Equity Accounts payable $ 25,300 Salaries payable 500 Total current liabilities 25,800 Equity Common stock, no par value 117,300 Retained earnings 23,800 Total Habilities and equity $ 166,900 $ 32,400 13,000 75, 100 120,500 44,500 (16,500) $ 148,500 $ 27,400 600 28,000 107,400 13,100 $148,500 MONTGOMERY INC. Income Statement For Current Year Ended December 31 Sales $ 46,200 Cost of goods sold (19,280) Gross profit 27,000 Operating expenses Depreciation expense $ 7,300 Other expenses 5,600 Total operating expense 12,900 Income before taxes 14,100 Income tax expense 3,400 Net income $ 10,700 Additional Information on Current-Year Transactions a. No dividends are declared or paid. b. Issued additional stock for $9.900 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 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 $ 10,700 Adjustments to reconcile net income to net cash provided by operations: Income statement items not affecting cash Changes in current operating assets and liabilities Depreciation expense Increase in inventory Decrease in accounts receivable Decrease in accounts payable Decrease in salaries payable 7,300 (20,000) 2,400 (2.100) (100) $ (1,800) Net cash provided by operating activities Cash flows from investing activities Cash paid for equipment (8,200) $ (8,200) Net cash used in financing activities Cash flows from financing activities Cash received from stock issuance 9.900 $ $ Net cash provided by financing activities Net increase in cash Cash balance at beginning of year Cash balance at end of year 9.900 (100) 32,400 32,300 $