Exercise 12-12 Indirect: Preparing statement of cash flows LO P2, P3 nts Prior Year eBook MONTGOMERY INC. Comparative Balance Sheets December 31 Current Year Assets Cash $ 32,300 Accounts receivable, net 10,600 Inventory 95,100 Total currekt assets 138,000 Equipment 52,700 Accum. depreciation-Equipment 123,800) Total assets $ 166,900 Liabilities and Equity Accounts payable $ 25,300 Salaries payable 500 Total current liabilities 25,800 Equity Common stock, no par value 117,300 Retained earnings 23,800 Total liabilities and equity $166,900 $ 32,400 13,000 75, 100 120,500 44,500 (16,500) $ 148,500 Print eferences $ 27,400 600 28,000 107,400 13.100 $148,500 MONTGOMERY INC. Income Statement Por Current Year Ended December 31 Sales $ 46,200 Cost of goods sold (19,200) Gross profit 27,000 Operating expenses Depreciation expense $ 7.300 Other expenses 5,600 Total operating expense 12.900 Income before taxes 14,100 Income tax expense 3,400 Net income $ 10, 700 Retained earnings Total liabilities and equity 23, 800 $166,900 13,100 $ 148,500 MONTGOMERY INC. Income Statement For Current Year Ended December 31 Sales $ 46,200 Cost of goods sold (19,200) Gross profit 27,000 Operating expenses Depreciation expense $ 7,300 Other expanses 5,600 Total operating expense 12,900 Income before taxes 14,100 Income tax expense 3,400 Net income $ 10, 700 ok h int rences Additional Information on Current-Year Transactions a. No dividends are declared or paid. b. Issued additional stock for $9,900 cash. c. 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.) MONTGOMERY, INC. Statement of Cash Flows (Indirect Method) For Current Year Ended December 31 Cash flows from operating activities Net Income Adjustments to reconcile net income to net cash provided by operations: Income statement items not affecting cash He! 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.) MONTGOMERY, INC. Statement of Cash Flows (Indirect Method) For Current Year Ended December 31 Cash flows from operating activities Net income Adjustments to reconcile net income to net cash provided by operations: Income statement items not affecting cash Depreciation expense ok 2 Changes in current operating assets and liabilities Decrease in accounts receivable Increase in inventory Decrease in accounts payable Decrease in salaries payable $ 0 Cash flows from investing activities $ 0 Cash flows from financing activities MONTGOMERY, INC. Statement of Cash Flows (Indirect Method) For Current Year Ended December 31 Cash flows from operating activities Net income Adjustments to reconcile net income to net cash provided by operations: Income statement items not affecting cash Depreciation expense + Changes in current operating assets and liabilities Decrease in accounts receivable Increase in inventory Decrease in accounts payable Decrease in salaries payable ces $ 0 Cash flows from investing activities 0 Cash flows from financing activities $ S 0 0 Cash balance at beginning of year Cash balance at end of year S 0