Question

MONTGOMERY INC. Comparative Balance Sheets December 31, 2018 and 2017
		2018				2017
Assets
Cash	$	55,900			$	56,300
Accounts receivable, net		13,800				16,800
Inventory		123,700				97,100
Total current assets		193,400				170,200
Equipment		68,500				57,500
Accum. depreciation—Equipment		(31,000	)			(21,200	)
Total assets	$	230,900			$	206,500
Liabilities and Equity
Accounts payable	$	33,000			$	35,200
Salaries payable		600				800
Total current liabilities		33,600				36,000
Equity
Common stock, no par value		165,900				153,100
Retained earnings		31,400				17,400
Total liabilities and equity	$	230,900			$	206,500

MONTGOMERY INC. Income Statement For Year Ended December 31, 2018
Sales				$	61,200
Cost of goods sold					(25,400	)
Gross profit					35,800
Operating expenses
Depreciation expense	$	9,800
Other expenses		7,500
Total operating expense					17,300
Income before taxes					18,500
Income tax expense					4,500
Net income				$	14,000

Additional Information

No dividends are declared or paid in 2018.

Issued additional stock for $12,800 cash in 2018.

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.)

Answer 1