MONTGOMERY INC. Comparative Balance Sheets December 31, 2018 and 2017 2018 2017

Question

MONTGOMERY INC. Comparative Balance Sheets December 31, 2018 and 2017 2018 2017 Assets Cash Accounts receivable, net Inventory Total current assets Equipment Accum. depreciation-Equipment Total assets $ 55,600 $ 55,900 15,400 112,100 89,0o 160,300 52,700 12,500 180,200 62,100 28,100 ) (19,400) $214,200 $193,600 Liabilities and Equity Accounts payable Salaries payable Total current liabilities Equity Common stock, no par value Retained earnings Total liabilities and equity $ 29,900 32,200 700 500 30,400 32,900 156,300 145,5060 15,200 $214,200 $193,600 27,500 MONTGOMERY INC. Income Statement For Year Ended December 31, 2018 Sales Cost of goods sold Gross profit Operating expenses $ 54,000 22,400 31,600 $ 8,700 6,700 Depreciation expense Other expenses Total operating expensee Income before taxes Income tax expense Net income 15,400 16,200 3,900 $ 12,300 dditional Information a. No dividends are declared or paid in 2018 b. Issued additional stock for $10,800 cash in 2018 c. Purchased equipment for cash in 2018; no equipment was sold in 2018 Use the above financial statements and additional information to prepare a statement of cash flows for thee ear ended December 31, 2018, using the indirect method. (Amounts to be deducted should be indicated by minus sign.)

Explanation / Answer

Cash flow from operating activities Net income 12,300 Adjustments to reconcile net income to net cash provided by operations Depreciation expense 8,700 Decrease in account receivable 2,900 increase in inventory -23100 decrease in accounts payable -2300 Decrease in salaries payable -200 net cash used by operating activities -1,700 -1,700 cash from investing activities purchase of Equipment -9400 net cash used by investing activities -9,400 cash from financing activities cash from stock issue 10,800 net cash provided by financing activities 10,800 net decrease incash -300 cash at the beginning 55,900 Cash at year end 55,600

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