QS 12-19 Indirect: Preparing statement of cash flows LO P1, P2, P3

MONTGOMERY INC. Comparative Balance Sheets December 31, 2018 and 2017
		2018				2017
Assets
Cash	$	33,200			$	33,400
Accounts receivable, net		12,100				14,700
Inventory		108,500				84,900
Total current assets		153,800				133,000
Equipment		60,100				50,200
Accum. depreciationEquipment		(27,100	)			(18,500	)
Total assets	$	186,800			$	164,700
Liabilities and Equity
Accounts payable	$	28,800			$	30,700
Salaries payable		600				700
Total current liabilities		29,400				31,400
Equity
Common stock, no par value		130,000				118,100
Retained earnings		27,400				15,200
Total liabilities and equity	$	186,800			$	164,700

MONTGOMERY INC. Income Statement For Year Ended December 31, 2018
Sales				$	53,500
Cost of goods sold					(22,200	)
Gross profit					31,300
Operating expenses
Depreciation expense	$	8,600
Other expenses		6,600
Total operating expense					15,200
Income before taxes					16,100
Income tax expense					3,900
Net income				$	12,200

Additional Information

1. No dividends are declared or paid in 2018.
2. Issued additional stock for $11,900 cash in 2018.
3. Purchased equipment for cash in 2018; no equipment was sold in 2018.

1. Use the above financial statements and additional information to prepare a statement of cash flows for the year ended December 31, 2018, using the indirect method. (Amounts to be deducted should be indicated by a minus sign.)

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MONTGOMERY, INC. Statement of Cash Flows (Indirect Method) For Year Ended December 31, 2018 Cash flows from operating activities Net income 12,200 Adjustments to reconcile net income to net cash provided by operations: Changes in current operating assets and liabilities Decrease in accounts receivable 2,600 Increase in inventory (23,600) Decrease in accounts payable (1,900) Decrease in salaries payable (100) Depreciation expense 8,600 $ (2,200) Cash flows from investing activities Cash paid for equipment (9,900) (9,900) Cash flows from financing activities Cash received from stock issuance 11,900 Net cash provided by financing activities Net decrease in cash Cash balance at beginning of year Cash balance at end of year $ 11,900 (200) 33,400 33,200 $