Preparing a Statement of Cash Flows (Indirect Method)
Deep Waters Company was started several years ago by two diving instructors. The company’s comparative balance sheets and income statement are presented below, along with additional information.
| 2012 | 2011 |
Balance Sheet at December 31 |
|
|
Cash | $ 3,700 | $4,000 |
Accounts receivable | 900 | 800 |
Prepaid expenses | 100 | 50 |
Equipment | 400 | 0 |
| $5,100 | $4,850 |
Wages payable | $450 | $1,100 |
Contributed capital | 1,600 | 1,000 |
Retained earnings | 3,050 | 2,750 |
| $ 5,100 | $ 4,850 |
Income Statement for 2012 | ||
Lessons revenue | $ 33,950 | |
Wages expenses | 30.000 | |
Other expenses | 3,650 | |
Net income | $300 |
Additional Data:
a.Prepaid expenses relate to rent paid in advance.
b.Other expenses were paid in cash.
c.Purchased equipment for $400 cash at the end of 2012 to be used starting in 2013.
d.An owner contributed capital by paying $600 cash in exchange for the company’s stock.
Required:
Prepare the statement of cash flows for the year ended December 31, 2012, using the indirect method.
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