PB12-4 (Algo) Preparing and Interpreting a Statement of Cash Flows (Indirect Method) [LO 12-2, LO 12-3, LO 12-4, LO 12-5]

Dive In Company was started several years ago by two diving instructors. The companys comparative balance sheets and income statement, as well as additional information, are presented below.

	Current Year	Previous Year
Balance Sheet at December 31
Cash	$ 4,040	$ 4,870
Accounts Receivable	1,600	800
Prepaid Rent	160	80
Total Assets	$ 5,800	$ 5,750
Salaries and Wages Payable	$ 650	$ 1,700
Common Stock	1,800	1,300
Retained Earnings	3,350	2,750
Total Liabilities and Stockholders Equity	$ 5,800	$ 5,750
Income Statement
Service Revenue	$ 40,550
Salaries and Wages Expense	36,000
Rent and Office Expenses	3,950
Net Income	$ 600

Additional Data:

1. Rent is paid in advance each month, and Office Expenses are paid in cash as incurred.
2. An owner contributed capital by paying $500 cash in exchange for the companys stock.

Required: 1. Prepare the statement of cash flows for the current year ended December 31 using the indirect method. (Amounts to be deducted should be indicated by a minus sign.)

DIVE IN COMPANY Statement of Cash Flows For the Year Ended December 31 Cash Flows from Operating Activities: Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities: Changes in current assets and current liabilities 0 Cash Flows from Financing Activities: 0 0