Additional Information No dividends are declared or paid in 2018. Issued additio
ID: 2599020 • Letter: A
Question
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.)
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 (Indirect Method) For Year Ended December 31, 2018 Cash flows from operating activities Net income 12,200 Adjustments to reconcile net income to net cash provided by operations: Changes in current operating assets and liabilities Decrease in Accounts Receivable 2,600 Increase in Inventory -23,600 Decrease in Accounts Payable -1,900 Decrease in Salary Payable -100 Depreciation Expense 8,600 Net cash used in Operating activities (A) -2,200 Cash flows from investing activities Purchase of Equipment -9,900 Net cash used in Investing activities (B) -9,900 Cash flows from financing activities Issued additional stock 11,900 Net cash flows from Financing activities ( C ) 11,900 Net cash used during the financial year (A+B+C) -200 Cash balance at beginning of year 33,400 Cash balance at end of year 33,200
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