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	$	38,200			$	38,700
Accounts receivable, net		10,800				13,400
Inventory		96,800				77,500
Total current assets		145,800				129,600
Equipment		53,600				45,800
Accum. depreciationEquipment		(24,200	)			(16,900	)
Total assets	$	175,200			$	158,500
Liabilities and Equity
Accounts payable	$	25,700			$	28,100
Salaries payable		400				500
Total current liabilities		26,100				28,600
Equity
Common stock, no par value		129,300				119,000
Retained earnings		19,800				10,900
Total liabilities and equity	$	175,200			$	158,500

MONTGOMERY INC. Income Statement For Year Ended December 31, 2018
Sales				$	40,300
Cost of goods sold					(16,700)
Gross profit					23,600
Operating expenses
Depreciation expense	$	7,300
Other expenses		5,000
Total operating expense					12,300
Income before taxes					11,300
Income tax expense					2,400
Net income				$	8,900

Additional Information

1. No dividends are declared or paid in 2018.
2. Issued additional stock for $10,300 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.)

Options to choose from:

MONTGOMERY, INC. Statement of Cash Flows (Indirect Method) For Year Ended December 31, 2018 Cash flows from operating activities Adjustments to reconcile net income to net cash provided by operations: Changes in current operating assets and liabilities 0 Cash flows from investing activities Cash flows from financing activities Cash flows from financing activities 0 Cash balance at beginning of year Cash balance at end of year 0 Cash paid for equipment Cash received from stock issuance Decrease in accounts payable Decrease in accounts receivable Decrease in inventory Decrease in salaries payable Depreciation expense Increase in accounts payable Increase in accounts receivable Increase in inventory Increase in salaries payable Net cash provided by financing activities Net cash provided by investing activities Net cash provided by operating activities Net cash used in financing activities Net cash used in investing activities Net cash used in investing activities Net cash used in operating activities