Use the following financial statements and additional information to
(1) Prepare a statement of cash flows for the year ended December 31, 2014, using the indirect method,
(2) Analyze and briefly discuss the statement prepared in part 1 with special attention to operating activities and to the company€™s cash level.

Additional Information
a. No dividends are declared or paid in 2014.
b. Issued additional stock for $ 10,000 cash in 2014.
c. Purchased equipment for cash in 2014; no equipment was sold in2014.

Transcribed Image Text:

MONTGOMERY INC. Comparative Balance Sheets December 31,2014 and 2013 2014 2013 Assets Cash Accounts receivable, net. MONTGOMERY INC. Income Statement 30.400 30,550 0,050 90,100 49,900 (22.500) (5,300 Cost of goods sold.... 2,150 70.150 For Year Ended December 31,2014 Equipment . . . Accum. depreciation-Equipment Total assets ...................。 $45,575 (18,950) 26,625 $157,950 $139,050 Gross profit . . Operating expenses Liabilities and Equity Accounts payable Salaries payable Common stock, no par value.... Retained earnings .. . Total liabilities and equity .. $157,950 $139,050 Net income Depreciation expense.. .$7,200 $23,900 25,400 Other expenses5,550 500 10,000 23,550 600 Total operating expense . 2,750 13,875 3,375 $10,500