Question

Exercise 16-12 Indirect: Preparing statement of cash flows LO P2, P3

MONTGOMERY INC. Comparative Balance Sheets December 31
	Current Year						Prior Year
Assets
Cash		$	53,800					$	53,900
Accounts receivable, net			13,400						16,400
Inventory			120,100						94,800
Total current assets			187,300						165,100
Equipment			66,500						56,100
Accum. depreciation—Equipment			(30,100	)					(20,700	)
Total assets		$	223,700					$	200,500
Liabilities and Equity
Accounts payable		$	32,000					$	34,400
Salaries payable			600						800
Total current liabilities			32,600						35,200
Equity
Common stock, no par value			159,400						147,900
Retained earnings			31,700						17,400
Total liabilities and equity		$	223,700					$	200,500

MONTGOMERY INC. Income Statement For Current Year Ended December 31
Sales				$	60,900
Cost of goods sold					(25,300	)
Gross profit					35,600
Operating expenses
Depreciation expense	$	9,400
Other expenses		7,400
Total operating expense					16,800
Income before taxes					18,800
Income tax expense					4,500
Net income				$	14,300

Additional Information on Current-Year Transactions

1. No dividends are declared or paid.
2. Issued additional stock for $11,500 cash.
3. 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.)

Answer 1