QS 16-17 Indirect: Preparation of statement of cash flows - MONTGOMERY INC

QS 16-17 Indirect: Preparation of statement of cash flows LO P1

MONTGOMERY INC. Comparative Balance Sheets December 31, 2014 and 2013
		2014			2013
Assets
Cash	$	30,400		$	30,550
Accounts receivable, net		10,050			12,150
Inventory		90,100			70,150
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
Common stock, no par value		110,000			100,000
Retained earnings		23,550			13,050

Total liabilities and equity	$	157,950		$	139,050

MONTGOMERY INC. Income Statement For Year Ended December 31, 2014
Sales			$	45,575
Cost of goods sold				(18,950	)

Gross profit				26,625
Operating expenses
Depreciation expense	$	7,200
Other expenses		5,550

Total operating expense				12,750

Income before taxes				13,875
Income tax expense				3,375

Net income			$	10,500

Additional Information

a.	No dividends are declared or paid in 2014.
b.	Issued additional stock for $10,000 cash in 2014.
c.	Purchased equipment for cash in 2014; no equipment was sold in 2014.

(1)	Use the above financial statements and additional information to prepare a statement of cash flows for the year ended December 31, 2014, using the indirect method. (Amounts to be deducted should be indicated by a minus sign.)

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