E12-18 (Algo) Preparing a Statement of Cash Flows (Indirect Method) LO12-2, 12-4, 12-6 Computer Service and Repair was started five years ago by two college roommates. 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 Accounts receivable Prepaid expenses Equipment Accumulated depreciation $12,025 650 125 0 $ 9,075 1,450 850 650 (125) $11,900 $ 500 225 4,000 7,175 $11,900 $12,800 $ 1,850 Wages payable Short-term note payable Common stock Retained earnings 4,000 6,950 $12,800 Income Statement for Current Year Service revenue Depreciation expense Salaries expense Other expenses Net income $49,000 125 37,500 11,150 $ 225 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.) S 225 COMPUTER SERVICE AND REPAIR Statement of Cash Flows For the Year Ended December 31, Current Year Cash flows from operating activities: Net income Adjustments to reconcile net income to net cash provided by operating activities: Depreciation Increase in accounts receivable Increase in prepaid expenses Decrease in wages payable 125 (800) (725) (1.350) (2.525) Net cash used for operating activities Cash flows from investing activities: Cash paid for equipment (650) (650) Net cash used for investing activities Cash flows from financing activities: Cash proceeds from short-term borrowing 225 225 Net cash provided by financing activities Net decrease in cash during the year Cash balance, January 1, current year Cash balance, December 31, current year 12,025 $ 12,025