MONTGOMERY INC. Comparative Balance Sheets December 31, 2016 and 2015 Use the ab

Question

MONTGOMERY INC.
Comparative Balance Sheets
December 31, 2016 and 2015

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.
Comparative Balance Sheets
December 31, 2016 and 2015

2016 2015   Assets   Cash $ 30,400 $ 30,550   Accounts receivable, net 10,050 12,150   Inventory 90,100 70,150   Total current assets 130,550 112,850   Equipment 49,900 41,500   Accum. depreciation—Equipment (22,500 ) (15,300 )   Total assets $ 157,950 $ 139,050   Liabilities and Equity   Accounts payable $ 23,900 $ 25,400   Salaries payable 500 600   Total current liabilities 24,400 26,000   Equity   Common stock, no par value 110,000 100,000   Retained earnings 23,550 13,050   Total liabilities and equity $ 157,950 $ 139,050

Explanation / Answer

Statement of cash flow :

Cash flow from operating activities Net income 10500 Adjustment to reconcile net income Depreciation expense 7200 Decrease account receivable 2100 Increase inventory -19950 Decrease account payable -1500 Decrease salary payable -100 -12250 Net cash flow from operating activities -1750 Cash flow from investing activities Purchase equipment -8400 Net cash flow from investing activities -8400 Cash flow from financing activities Issue common stock 10000 Net cash flow from financing activities 10000 Net cash flow -150 Beginning cash 30550 Ending cash 30400

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