QS 12-19 Indirect: Preparation of statement of cash flows LO P1, P2, P3 2015 MONTGOMERY INC. Comparative Balance Sheets December 31, 2016 and 2015 2016 Assets Cash $ 64,000 Accounts receivable, net 18,700 Inventory 167,600 $64.600 23.100 133,500 Total current assets Equipment Accum. depreciation Equipment 130,550 92,800 (42,000) 112.850 79,000 (29,100) Total assets $301,100 $271,100 Liabilities and Equity Accounts payable Salaries payable $ 44,700 800 $ 48.400 1,000 24,400 26,000 Total current liabilities Equity Common stock, no par value Retained earnings 216,400 39,200 $301,100 199,900 21,800 $271,100 Total liabilities and equity MONTGOMERY INC. Income Statement For Year Ended December 31, 2016 Sales Cost of goods sold $ 78,000 (32,300) 45,700 Gross profit Operating expenses Depreciation expense Other expenses $ 12,900 9,700 Total operating expense 22,600 Income before taxes Income tax expense 23,100 5,700 Net income $ 17,400 Additional Information a. No dividends are declared or paid in 2016. b. Issued additional stock for $16,500 cash in 2016. c. Purchased equipment for cash in 2016, no equipment was sold in 2016. (1) Use the above financial statements and additional information to prepare a statement of cash flows for the year ended December 31, 2016, using the indirect method. (Amounts to be deducted should be indicated by a minus sign.) MONTGOMERY, INC. Statement of Cash Flows (Indirect Method) For Year Ended December 31, 2016 Cash flows from operating activities Net Income Adjustments to reconcile net income to net cash provided by operations: Changes in current operating assets and liabilities Cash flows from investing activities Cash flows from financing activities $ Net increase in cash Cash balance at beginning of year Cash balance at end of year