Problem

Preparing a Statement of Cash Flows (Indirect Method)Deep Waters Company was started sever...

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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