1. Use the above information to prepare a statement of cash flows for the current year using the indirect method.MONTGOMERY INCORPORATEDIncome StatementFor Current Year Ended December 31Sales$45,575Cost of goods sold18,950 Gross profit26,625 Salaries expense5,550 Depreciation expense7,200 Income before taxes13,875 Income tax expense3,375 Net income$10,500 Additional Information on Current-Year Transactions a. No dividends are declared or paid. b. Issued additional stock for $10,000 cash. c. Purchased equipment for cash; no equipment was sold. 1234567At December 31AssetsCashMONTGOMERY INCORPORATEDComparative Balance SheetsAccounts receivable, netInventoryTotal current assets8910Equipment11 Accumulated depreciation-Equipment12Total assets13Liabilities and Equity14Accounts payable15Salaries payable16Total current liabilities1718192021EquityCommon stock, no par valueRetained earningsTotal liabilities and equityCurrent Year$30,40010,05090,100130,55049,900(22,500)$157,950$23,90050024,400110,00023,550$157,950Prior Year$30,55012,15070,150112,85041,500(15,300)$139,050$25,40060026,000100,00013,050$139,050

The cash flow statement is one of the financial statements which tells about the cash flow from…

Answered: Use the above information to prepare a…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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1. Use the above information to prepare a statement of cash flows for the current year using the indirect method.

MONTGOMERY INCORPORATED
Income Statement
For Current Year Ended December 31
Sales	$45,575
Cost of goods sold	18,950
Gross profit	26,625
Salaries expense	5,550
Depreciation expense	7,200
Income before taxes	13,875
Income tax expense	3,375
Net income	$10,500

Additional Information on Current-Year Transactions
a. No dividends are declared or paid.
b. Issued additional stock for $10,000 cash.
c. Purchased equipment for cash; no equipment was sold.

123
4
5
6
7
At December 31
Assets
Cash
MONTGOMERY INCORPORATED
Comparative Balance Sheets
Accounts receivable, net
Inventory
Total current assets
8
9
10
Equipment
11 Accumulated depreciation-Equipment
12
Total assets
13
Liabilities and Equity
14
Accounts payable
15
Salaries payable
16
Total current liabilities
17
18
19
20
21
Equity
Common stock, no par value
Retained earnings
Total liabilities and equity
Current Year
$30,400
10,050
90,100
130,550
49,900
(22,500)
$157,950
$23,900
500
24,400
110,000
23,550
$157,950
Prior Year
$30,550
12,150
70,150
112,850
41,500
(15,300)
$139,050
$25,400
600
26,000
100,000
13,050
$139,050

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