QS 12-19 Indirect: Preparing statement of cash flows LO P1, P2, P3 Additional In

Question

QS 12-19 Indirect: Preparing statement of cash flows LO P1, P2, P3

Additional Information

No dividends are declared or paid in 2018.

Issued additional stock for $11,900 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.)
  

MONTGOMERY INC.
Comparative Balance Sheets
December 31, 2018 and 2017 2018 2017 Assets Cash $ 33,200 $ 33,400 Accounts receivable, net 12,100 14,700 Inventory 108,500 84,900 Total current assets 153,800 133,000 Equipment 60,100 50,200 Accum. depreciation—Equipment (27,100 ) (18,500 ) Total assets $ 186,800 $ 164,700 Liabilities and Equity Accounts payable $ 28,800 $ 30,700 Salaries payable 600 700 Total current liabilities 29,400 31,400 Equity Common stock, no par value 130,000 118,100 Retained earnings 27,400 15,200 Total liabilities and equity $ 186,800 $ 164,700

Explanation / Answer

Montgomery, Inc.

Statement of cash flows

For the year ended December 31, 2018

Kindly give a positive rating if you are satisfied with the solution. Feel free to ask if you have any doubts. Thanks

I. Cash flows from operating activities Net income 12,200 Add: Income tax expense 3,900 Add: Depreciation expense 8,600 Operating profit before working capital changes 24,700 Adjustments to reconcile net income to net cash provided by operations: Changes in current operating assets and liabilities Accounts receivables 2,600 Inventory -23,600 Accounts payable - 1,900 Salaries payable - 100 Less: Income tax expense - 3,900 Net cash used in operating activities -2,200 II. Cash flows from Investing activities Equipment purchased - 9,900 Net cash used in Investing activities -9,900 III. Cash flows from Financing Activities Issue of common stock 11,900 Net cash flows from Financing activities 11,900 Net increase in cash (I + II + III) - 200 Cash balance at the begining of the year 33,400 Cash balance at the end of the year 33,200

Related Questions

Navigate

• Browse (All)
• Browse Q
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.