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 $ 3,685 750 150 370 (55) $ 4,900 $4,535 510 55 0 0 Wages payable Short-term note payable Common stock Retained earnings $ 360 295 1,200 3,045 $ 4,900 $5,100 $1,150 0 1,200 2,750 $5,100 Income Statement for Current Year Service revenue Depreciation expense Salaries expense Other expenses Net income $35,000 55 30,500 4,150 $ 295 Additional Data: a. Prepaid expenses relate to rent paid in advance. b. Other expenses were paid in cash. c. Purchased equipment for $370 cash at the beginning of the current year and recorded $55 of depreciation expense at the end of the current year. d. At the end of the current year, the company signed a short-term note payable to the bank for $295. 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.) Answer is not complete. > 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 OO 0 Net cash used for operating activities Cash flows from investing activities: Cash paid for equipment 0 Net cash used for investing activities Cash flows from financing activities: Cash proceeds from short-term borrowing > > 0 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 OOOO $ 0