QS 12-19 Indirect: Preparing statement of cash flows LO P1, P2, P3
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. depreciationâEquipment (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
MONTGOMERY INC.
Income Statement
For Year Ended December 31, 2018 Sales $ 53,500 Cost of goods sold (22,200 ) Gross profit 31,300 Operating expenses Depreciation expense $ 8,600 Other expenses 6,600 Total operating expense 15,200 Income before taxes 16,100 Income tax expense 3,900 Net income $ 12,200
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. Statement of Cash Flows (Indirect Method) For Year Ended December 31, 2018 Cash flows from operating activities Adjustments to reconcile net income to net cash provided by operations: Changes in current operating assets and liabilities $0 Cash flows from investing activities 0 Cash flows from financing activities 0 $0 Cash balance at beginning of year Cash balance at end of year $0
QS 12-19 Indirect: Preparing statement of cash flows LO P1, P2, P3
| 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. depreciationâEquipment | (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 | |||
| MONTGOMERY INC. Income Statement For Year Ended December 31, 2018 | ||||||
| Sales | $ | 53,500 | ||||
| Cost of goods sold | (22,200 | ) | ||||
| Gross profit | 31,300 | |||||
| Operating expenses | ||||||
| Depreciation expense | $ | 8,600 | ||||
| Other expenses | 6,600 | |||||
| Total operating expense | 15,200 | |||||
| Income before taxes | 16,100 | |||||
| Income tax expense | 3,900 | |||||
| Net income | $ | 12,200 | ||||
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.)
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Related questions
he following are the financial statements of Nosker Company.
NOSKER COMPANY | ||||||
Assets | 2017 | 2016 | ||||
| Cash | $36,400 | $20,800 | ||||
| Accounts receivable | 32,700 | 19,500 | ||||
| Inventory | 30,700 | 20,900 | ||||
| Equipment | 59,300 | 77,300 | ||||
| Accumulated depreciationâequipment | (29,700 | ) | (23,300 | ) | ||
| Total | $129,400 | $115,200 | ||||
Liabilities and Stockholdersâ Equity | ||||||
| Accounts payable | $28,000 | $ 16,600 | ||||
| Income taxes payable | 7,000 | 8,300 | ||||
| Bonds payable | 27,400 | 32,100 | ||||
| Common stock | 18,200 | 13,700 | ||||
| Retained earnings | 48,800 | 44,500 | ||||
| Total | $129,400 | $115,200 | ||||
NOSKER COMPANY | ||
| Sales revenue | $241,900 | |
| Cost of goods sold | 175,600 | |
| Gross profit | 66,300 | |
| Operating expenses | 24,700 | |
| Income from operations | 41,600 | |
| Interest expense | 2,600 | |
| Income before income taxes | 39,000 | |
| Income tax expense | 8,000 | |
| Net income | $31,000 | |
Additional data:
| 1. | Dividends declared and paid were $26,700. | |
| 2. | During the year equipment was sold for $9,800 cash. Thisequipment cost $18,000 originally and had a book value of $9,800 atthe time of sale. | |
| 3. | All depreciation expense, $14,600, is in the operatingexpenses. | |
| 4. | All sales and purchases are on account. |
Prepare a statement of cash flows using the indirect method.(Show amounts that decrease cash flow with either a -sign e.g. -15,000 or in parenthesis e.g.(15,000)?
Compute free cash flow.
| Free cash flow? |
???
The income statement, balance sheets, and additional informationfor Video Phones, Inc., are provided.
| VIDEO PHONES, INC. Income Statement For the Year Ended December 31, 2018 | |||
| Netsales | $ | 3,586,000 | |
| Expenses: | |||
| Cost of goods sold | $2,400,000 | ||
| Operating expenses | 948,000 | ||
| Depreciation expense | 36,000 | ||
| Loss on sale of land | 8,900 | ||
| Interest expense | 19,500 | ||
| Income tax expense | 57,000 | ||
| Totalexpenses | 3,469,400 | ||
| Netincome | $ | 116,600 | |
| VIDEO PHONES, INC. Balance Sheet December 31 | ||||
| 2018 | 2017 | |||
| Assets | ||||
| Current assets: | ||||
| Cash | $ | 257,740 | $ | 219,420 |
| Accounts receivable | 90,900 | 69,000 | ||
| Inventory | 105,000 | 144,000 | ||
| Prepaid rent | 14,160 | 7,080 | ||
| Long-termassets: | ||||
| Investments | 114,000 | 0 | ||
| Land | 219,000 | 258,000 | ||
| Equipment | 288,000 | 219,000 | ||
| Accumulated depreciation | (79,800) | (43,800) | ||
| Total assets | $ | 1,009,000 | $ | 872,700 |
| Liabilities andStockholders' Equity | ||||
| Currentliabilities: | ||||
| Accounts payable | $ | 74,100 | $ | 90,000 |
| Interest payable | 6,900 | 11,800 | ||
| Income tax payable | 15,900 | 14,900 | ||
| Long-termliabilities: | ||||
| Notes payable | 303,000 | 234,000 | ||
| Stockholders'equity: | ||||
| Common stock | 390,000 | 390,000 | ||
| Retained earnings | 219,100 | 132,000 | ||
| Total liabilitiesand stockholdersâ equity | $ | 1,009,000 | $ | 872,700 |
Additional Information for 2018:
1. Purchase investment in bonds for $114,000.
2. Sell land costing $39,000 for only $30,100, resulting in a$8,900 loss on sale of land.
3. Purchase $69,000 in equipment by borrowing $69,000 with a notepayable due in three years. No cash is exchanged in thetransaction.
4. Declare and pay a cash dividend of $29,500.
Required:
Prepare the statement of cash flows using the indirectmethod. Disclose any noncash transactions in an accompanying note.(List cash outflows and any decrease in cash as negativeamounts.)
The income statement, balance sheets, and additional informationfor Video Phones, Inc., are provided.
| VIDEO PHONES, INC. Income Statement For the Year Ended December 31, 2018 | |||
| Netsales | $ | 3,586,000 | |
| Expenses: | |||
| Cost of goods sold | $2,400,000 | ||
| Operating expenses | 948,000 | ||
| Depreciation expense | 36,000 | ||
| Loss on sale of land | 8,900 | ||
| Interest expense | 19,500 | ||
| Income tax expense | 57,000 | ||
| Totalexpenses | 3,469,400 | ||
| Netincome | $ | 116,600 | |
| VIDEO PHONES, INC. Balance Sheet December 31 | ||||
| 2018 | 2017 | |||
| Assets | ||||
| Current assets: | ||||
| Cash | $ | 257,740 | $ | 219,420 |
| Accounts receivable | 90,900 | 69,000 | ||
| Inventory | 105,000 | 144,000 | ||
| Prepaid rent | 14,160 | 7,080 | ||
| Long-termassets: | ||||
| Investments | 114,000 | 0 | ||
| Land | 219,000 | 258,000 | ||
| Equipment | 288,000 | 219,000 | ||
| Accumulated depreciation | (79,800) | (43,800) | ||
| Total assets | $ | 1,009,000 | $ | 872,700 |
| Liabilities andStockholders' Equity | ||||
| Currentliabilities: | ||||
| Accounts payable | $ | 74,100 | $ | 90,000 |
| Interest payable | 6,900 | 11,800 | ||
| Income tax payable | 15,900 | 14,900 | ||
| Long-termliabilities: | ||||
| Notes payable | 303,000 | 234,000 | ||
| Stockholders'equity: | ||||
| Common stock | 390,000 | 390,000 | ||
| Retained earnings | 219,100 | 132,000 | ||
| Total liabilitiesand stockholdersâ equity | $ | 1,009,000 | $ | 872,700 |
Additional Information for 2018:
1. Purchase investment in bonds for $114,000.
2. Sell land costing $39,000 for only $30,100, resulting in a$8,900 loss on sale of land.
3. Purchase $69,000 in equipment by borrowing $69,000 with a notepayable due in three years. No cash is exchanged in thetransaction.
4. Declare and pay a cash dividend of $29,500.
Required:
Prepare the statement of cash flows using the indirectmethod. Disclose any noncash transactions in an accompanying note.(List cash outflows and any decrease in cash as negativeamounts.)
