Reference no: EM132467229
Monty Inc., a greeting card company, had the following statements prepared as of December 31, 2017.
MONTY INC.
COMPARATIVE BALANCE SHEET
AS OF DECEMBER 31, 2017 AND 2016
12/31/17 12/31/16
Cash $6,100 $7,100
Accounts receivable 61,500 51,000
Short-term debt investments (available-for-sale) 34,800 17,900
Inventory 39,800 59,900
Prepaid rent 5,000 4,000
Equipment 155,200 129,900
Accumulated depreciation-equipment (35,200) (24,800)
Copyrights 45,800 49,800
Total assets $313,000 $294,800
Accounts payable $45,800 $39,800
Income taxes payable 4,100 6,000
Salaries and wages payable 7,900 3,900
Short-term loans payable 8,000 9,900
Long-term loans payable 60,100 68,900
Common stock, $10 par 100,000 100,000
Contributed capital, common stock 30,000 30,000
Retained earnings 57,100 36,300
Total liabilities & stockholders' equity $313,000 $294,800
MONTY INC.
INCOME STATEMENT
FOR THE YEAR ENDING DECEMBER 31, 2017
Sales revenue $338,200
Cost of goods sold 174,500
Gross profit 163,700
Operating expenses 120,800
Operating income 42,900
Interest expense $11,400
Gain on sale of equipment 2,000
9,400
Income before tax 33,500
Income tax expense 6,700
Net income $26,800
Additional information:
Point 1. Dividends in the amount of $6,000 were declared and paid during 2017.
Point 2. Depreciation expense and amortization expense are included in operating expenses.
Point 3. No unrealized gains or losses have occurred on the investments during the year.
Point 4. Equipment that had a cost of $20,200 and was 70% depreciated was sold during 2017.
Question 1: 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).)