QS 12-19 Indirect: Preparation of statement of cash flows LO P1, P2, P3 MONTGOMERY INC Comparative Balance Sheets December 31, 2016 and 2015 2016 2015 Assets Cash Accounts receivable, net Inventory $ 32,300 32,400 10,600 95,100 13,000 75,100 Total current assets 130,550 112,850 52,700 (23,800) 16,500) Equipment Accum. depreciation-Equipment 44,500 $166,900 $148,500 Total assets Liabilities and Equity Accounts payable Salaries payable $ 25,300 $ 27,400 500 600 Total current liabilities 24,400 26,000 Equity Common stock, no par value Retained earnings 117,300 107,400 23,800 13,100 Total liabilities and equity $166,900 $148,500 MONTGOMERY INC Income Statement For Year Ended December 31, 2016 $ 46,200 (19,200) Sales Cost of goods sold Gross profit Operating expenses Depreciation expense Other expenses 27,000 $ 7,300 5,600 12,900 Total operating expense Income before taxes 14,100 3,400 Income tax expense $ 10,700 Net income Additional Information a. No dividends are declared or paid in 2016 b. Issued additional stock for $9,900 cash in 2016. c. Purchased equipment for cash in 2016; no equipment was sold in 2016. (1) Use the above financial statements and additional information to prepare a statement of cash flows for the year ended December 31, 2016, using the indirect method. (Amounts to be deducted should be indicated by a minus sign.) MONTGOMERY, INC. Statement of Cash Flows (Indirect Method) For Year Ended December 31, 2016 Cash flows from operating activities Net Income Adjustments to reconcile net income to net cash provided by operations Changes in current operating assets and liabilities Cash flows from investing activities Cash flows from financing activities Net increase in cash Cash balance at beginning of year Cash balance at end of year