Dive In Company was started several years ago by two diving instructors. The com

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.

Dive In Company was started several years ago by two diving instructors. The company’s comparative balance sheets and income statement are presented below.

C Chegg Study Guided SFinal Exam xM Final Exam Untitled document-Go - ezto.mheducation.com/hm.tpx 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 $ 5,160 $6,030 2,400 1,200 120 240 $ 7,800 $7,350 Salaries and Wages Payable Common Stock Retained Earnings 1,050 $2,500 2,600 1,700 4,1503,150 $ 7,800 $7,350 Income Statement Service Revenue Salaries and Wages Expense Other Operating Expenses $49,350 44,000 4,350 Net Income $ 1,000 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 $900 cash in exchange for the company's stock. +1 4:39.0

Explanation / Answer

DIVE IN COMPANY

Statement of Cash Flows

For the year ended December 31

Cash Flows from Operating Activities;

Net income

$1000

Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:

- Increase in Accounts Receivable

($1200)

- Increase in Prepaid Expenses

($120)

- Decrease in Salaries and Wages Payable

($1450)

($2770)

Cash Flow Used in Operating Activities

($1770)

Cash Flows Used in Investing Activities;

Nil

Cash Flows from Financing Activities;

Contributed capital

$900

Cash Flow from Financing Activities;

$900

Net cash flow from all activities ($1770) + $900

($870)

Opening cash balance

$6030

Closing cash balance

$5160

Working Note;

1. As we know that total cash flow from all activities and opening cash balance must be equal to closing cash balance.

2. No information or transaction is given about investing activity. That is why no cash flow took place from this activity.

DIVE IN COMPANY

Statement of Cash Flows

For the year ended December 31

Cash Flows from Operating Activities;

Net income

$1000

Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:

- Increase in Accounts Receivable

($1200)

- Increase in Prepaid Expenses

($120)

- Decrease in Salaries and Wages Payable

($1450)

($2770)

Cash Flow Used in Operating Activities

($1770)

Cash Flows Used in Investing Activities;

Nil

Cash Flows from Financing Activities;

Contributed capital

$900

Cash Flow from Financing Activities;

$900

Net cash flow from all activities ($1770) + $900

($870)

Opening cash balance

$6030

Closing cash balance

$5160

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