Question 1

Use the data below to answer the question given below:

B-Z Bike Service Companys comparative balance sheets for year-end X2 (current year) and X1 and the income statement for year X2 are presented below, along with additional information.

Balance Sheets 12/31/X2 12/31/X1 Change

Cash $ 3,310 $3,200 $110

Accounts receivable 1,000 600 400

Prepaid rent 110 200 (90)

Equipment 500 0 500

Accumulated depreciation (300) 0 (300)

$ 4,620 $4,000

Wages payable $ 1,020 $ 700 $320

Common stock 1,100 900 200

Retained earnings 2,500 2,400 100

$4,620 $4,000

Income Statement Year X2

Service revenue $35,600

Depreciation expense -300

Salaries expense -30,000

Rent and other expenses -5,000

Net income $ 300

Additional information:

1) At the beginning of the year the company purchased $500 of equipment by paying $500 in cash.

2) The company declared and paid dividends of $200 in December X2.

3) The company issued common stock in January X2 for $200 cash.

Show below the cash flow statement for B-Z Bike Service Company for the year X2. Use the indirect method for the cash flow from operations section.