Question

QS 12-19 Indirect: Preparing statement of cash flows LO P1, P2, P3 MONTGOMERY INC. Comparative Balance...

QS 12-19 Indirect: Preparing statement of cash flows LO P1, P2, P3 MONTGOMERY INC. Comparative Balance Sheets December 31, 2018 and 2017 2018 2017 Assets Cash $ 58,200 $ 58,100 Accounts receivable, net 18,300 22,300 Inventory 164,100 128,800 Total current assets 240,600 209,200 Equipment 90,900 76,200 Accum. depreciation—Equipment (41,000 ) (28,100 ) Total assets $ 290,500 $ 257,300 Liabilities and Equity Accounts payable $ 43,600 $ 46,600 Salaries payable 900 1,100 Total current liabilities 44,500 47,700 Equity Common stock, no par value 202,500 185,700 Retained earnings 43,500 23,900 Total liabilities and equity $ 290,500 $ 257,300 MONTGOMERY INC. Income Statement For Year Ended December 31, 2018 Sales $ 83,500 Cost of goods sold (34,600 ) Gross profit 48,900 Operating expenses Depreciation expense $ 12,900 Other expenses 10,300 Total operating expense 23,200 Income before taxes 25,700 Income tax expense 6,100 Net income $ 19,600 Additional Information No dividends are declared or paid in 2018. Issued additional stock for $16,800 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.)

Homework Answers

Answer #1
Cash flow from operating activities
Net income 19,600
Adjustments to reconcile net income to net cash
provided by operations
Depreciation expense 12,900
Decrease in account receivable 4,000
increase in inventory -35300
decrease in accounts payable -3000
Decrease in salaries payable -200
net cash used by operating activities -2,000
cash from investing activities
purchase of Equipment -14700
net cash used by investing activities -14,700
cash from financing activities
cash from stock issue 16,800
net cash provided by financing activities 16,800
net decrease incash 100
cash at the beginning 58,100
Cash at year end 58,200
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