Question

Use the following financial statements and additional information to prepare a statement of cash flows for the year ended December 31, 2018 using the indirect method.

Monterey Company Balance Sheets At December 31
	2018	2017
Assets:
Cash	$85,600	$65,200
Accounts receivable, net	72,850	56,750
Merchandise inventory	157,750	144,850
Prepaid expenses	6,080	12,680
Equipment	280,600	245,600
Accumulated depreciation-Equipment	(80,600)	(97,600)
Total assets	$522,280	$427,480
Liabilities:
Accounts payable	$52,850	$45,450
Income taxes payable	15,240	12,240
Notes payable (long term)	59,200	79,200
Total liabilities	$127,290	$136,890
Equity:
Common stock	200,000	150,000
Paid-in capital in excess of par	53,000	40,000
Retained earnings	141,990	100,590
Total equity	$394,990	$290,590
Total liabilities and equity	$522,280	$427,480

Monterey Company Income Statement For Year Ended December 31, 2018
Sales		$488,000
Cost of goods sold	$212,540
Depreciation expense	43,000
Other operating expenses	106,260
Interest expense	6,400	(368,200)
Other gains (losses):
Gain on sale of equipment		4,700
Income before taxes		124,500
Income taxes expense		41,100
Net income		$83,400

Additional Information

a. Cash dividends declared and paid were $62,000.
b. New equipment is purchased for $120,000 cash.
c. Received $29,700 cash for the sale of equipment.

d. Issued new shares of stock receiving $63,000 cash.

Answer 1

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