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E12-17 Preparing a Statement of Cash Flows (Indirect Method) LO12-2, 12-4, 12-6 Shallow Waters Company was started several years ago by two diving instructors. The
E12-17 Preparing a Statement of Cash Flows (Indirect Method) LO12-2, 12-4, 12-6
Shallow Waters 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.
Current Year | Prior Year | ||||||
Balance Sheet at December 31 | |||||||
Cash | $ | 4,200 | $ | 4,400 | |||
Accounts receivable | 1,200 | 900 | |||||
Prepaid expenses | 100 | 150 | |||||
Equipment | 500 | 0 | |||||
$ | 6,000 | $ | 5,450 | ||||
Wages payable | $ | 950 | $ | 1,300 | |||
Contributed capital | 1,900 | 1,300 | |||||
Retained earnings | 3,150 | 2,850 | |||||
$ | 6,000 | $ | 5,450 | ||||
Income Statement for Current Year | |||||||
Lessons revenue | $ | 38,450 | |||||
Wages expense | 34,000 | ||||||
Other expenses | 4,150 | ||||||
Net income | $ | 300 | |||||
|
Additional Data:
- Prepaid expenses relate to rent paid in advance.
- Other expenses were paid in cash.
- Purchased equipment for $500 cash at the end of the prior year to be used starting in current year.
- An owner contributed capital by paying $600 cash in exchange for the company's stock.
Required:
Prepare the statement of cash flows for the year ended December 31, current year, using the indirect method. (List cash outflows as negative amounts.)
SHALLOW WATERS COMPANY Statement of Cash Flows For the Year Ended December 31, Current Year Cash flows from operating activities Adjustments to reconcile net income to net cash provided by operating activities: Cash flows from investing activities: Cash flows from financing activitiesStep by Step Solution
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