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

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 \($200\) cash in exchange for the company’s stock.

Required:

1. Prepare the statement of cash flows for the year ended December 31, 2010, using the indirect method.

2. Use the statement of cash flows to evaluate the company’s cash flows.

Transcribed Image Text:

Balance Sheet at December 31 2010 2009 Cash $ 3,200 $4,000 Accounts Receivable 1,000 500 Prepaids 100 50 $ 4,300 $4,550 Wages Payable $ 350 $1,100 Contributed Capital 1,200 1,000 Retained Earnings 2,750 2,450 $ 4,300 $4,550 Income Statement for 2010 Lessons Revenue $33,950 Wages Expense 30,000 Other Operating Expenses Net Income 3,650 $ 300