value: 20.00 points Dive In Company was started several years ago by two diving

Question

value: 20.00 points Dive In Company was started several years ago by two diving instructors. The company's comparative balance sheets and income statement are presented below Current Previous Year Year Balance Sheet at December 31 Cash Accounts Receivable Prepaid Expenses $ 3,900 $4,72-5 750 75 1,500 150 $ 5,550 $5,550 Salaries and Wages Payable Common Stock Retained Earnings 600 $1,600 1,250 2,700 1,700 3,250 $ 5,550 $5,550 Income Statement Service Revenue Salaries and Wages Expense Other Operating Expenses $39,450 35,000 3,900 Net Income $550 Additional Data a. Prepaid Expenses relate to rent paid in advance b. Other Operating Expenses were paid in cash c. An owner contributed capital by paying $450 cash in exchange for the company's stock Required: 1. Prepare the statement of cash flows for the current year ended December 31 using the direct method (Amounts to be deducted should be indicated by a minus sign.)

Explanation / Answer

Particulars Amount Amount Cash flow from operating activities Cash received from customers 38700 Cash paid to suppliers -3975 Cash paid to employees -36000 Cash flow from operations -1275 Cash flows used in investing activities Cash flows from financing Capital contributed 450 Net cash flow -825 Add opening cash balance 4725 Closing cash balance 3900 Cash received from customers Amount Opening balance 750 Add sales 39450 Total receivables 40200 Less closing balance -1500 Cash received 38700 Cash paid to employees Amount Opening balance 1600 Add current year wages 35000 Total payable 36600 Less closing balance -600 Cash paid 36000 Cash paid to suppliers Amount Total expense 3900 Add prepaid expense 75 Paid in cash 3975

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