E12-18 Preparing a Statement of Cash Flows using the Indirect Method

Computer Service and Repair was started five years ago by two college roommates. The companys comparative balance sheets and income statement are presented below, along with additional information.

	Current Year				Prior Year
Balance Sheet at December 31
Cash	$	6,765			$	8,815
Accounts receivable		1,150				590
Prepaid expenses		550				95
Equipment		530				0
Accumulated depreciation		(95)				0
	$	8,900			$	9,500
Wages payable	$	440			$	1,550
Short-term note payable		255				0
Common stock		2,800				2,800
Retained earnings		5,405				5,150
	$	8,900			$	9,500
Income Statement for Current Year
Service revenue	$	43,000
Depreciation expense		95
Salaries expense		34,500
Other expenses		8,150
Net income	$	255

Additional Data:

a. Prepaid expenses relate to rent paid in advance.

b. Other expenses were paid in cash.

c. Purchased equipment for $530 cash at the beginning of the current year and recorded $95 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 $255.

Prepare the statement of cash flows for the year ended December 31, current year, using the indirect method. (List cash outflows as negative amounts.)