Dive In Company was started several years ago by two diving instructors. The com
ID: 2437271 • 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 Year Balance Sheet at December 31 Cash Accounts Receivable Prepaid Expenses $ 4,180 $5,015 850 85 1,700 170 $ 6,050 $5,950 Salaries and Wages Payable $ 700 $1,800 1,350 2,800 Common Stock Retained Earnings 1,900 3,450 $ 6,050 $5,950 Income Statement Service Revenue Salaries and Wages Expense Other Operating Expenses $41,650 37,000 4,000 Net Income $650 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 $550 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 indirect method (Amounts to be deducted should be indicated by a minus sign.)Explanation / Answer
Statement of cash flow :
Cash flow from operating activities Net income 650 Adjustment to reconcile net income to net cash flow from operating activities Increase account receivable -850 Increase prepaid rent -85 Decrease salary and wages payable -1100 -2035 Net cash flow from operating activities -1385 Cash flow from investing activities Net cash flow from investing activities 0 Cash flow from financing activities Issue common Stock 550 Net cash flow from financing activities 550 Net Decrease in cash during the year -835 Cash balance, January 1 5015 Cash balance, December 31 4180