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.)
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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