Dive In Company was started several years ago by two diving instructors. The com
ID: 2432504 • Letter: D
Question
Dive In Company was started several years ago by two diving instructors. The company's comparative balance sheets and income statement are presented below Current Previous Year ear Balance Sheet at December 31 Cash Accounts Receivable Prepaid Expenses S 5,720 $6,610 140 $ 8,800 $8,150 Salaries and Wages Payable 1,250 $2,900 2,8001,400 280 Common Stock Retained Earnings 3,000 1,900 4,550 3,350 8,800 $8,150 Income Statement $53,750 Service Revenue Salaries and Wages Expense Other Operating Expenses 48,000 4,550 Net Income 1,200 Additional Data a Prepaid Expenses relate to rent paid in advance b Other Operating Expenses were paid in cash c An owner contributed capital by paying $1. 100 cash in exchange for the company's stock Required 1. Prepare the statement of cash flows for the current year ended December 31 using the direct method (Amounts to be deducted should be indicated by a minus sign.)Explanation / Answer
cash flow from operating activities
cash receipts from customers
cash receipts from customers
52350
opening balance of accounts receivables
1400
payment for operating expense
-4690
add service revenue
53750
payment for salaries
-49650
less year end balance of accounts receivables
2800
cash receipts from customers
52350
cash flow from operating activities
-1990
payment for operating expense
cash flow from investing activities
0
operating expense
4550
increase in prepaid expenses
140
cash flow from financing activities
payment for operating expense
4690
cash flow from common stock
1100
net cash flow during the year
beginning cash balance
6610
payment for salaries
year end cash balance
5720
salaries and wages
48000
decrease in salaries payable
1650
payment for salaries
49650
cash flow from operating activities
cash receipts from customers
cash receipts from customers
52350
opening balance of accounts receivables
1400
payment for operating expense
-4690
add service revenue
53750
payment for salaries
-49650
less year end balance of accounts receivables
2800
cash receipts from customers
52350
cash flow from operating activities
-1990
payment for operating expense
cash flow from investing activities
0
operating expense
4550
increase in prepaid expenses
140
cash flow from financing activities
payment for operating expense
4690
cash flow from common stock
1100
net cash flow during the year
beginning cash balance
6610
payment for salaries
year end cash balance
5720
salaries and wages
48000
decrease in salaries payable
1650
payment for salaries
49650