Shallow Waters Company was started several years ago by two diving instructors.

Question

Shallow Waters Company was started several years ago by two diving instructors. The company's additional information. nt are presented below, along with Current YearPrior Year Balance Sheet at December 31 Cash Accounts receivable Prepaid expenses Equipment $3,900 900 110 400 $4200 600 150 Wages payable Contributed capital Retained earnings $5,3104,950 960$1400 1,400 2,150 2,000 2,350 Income Statement for Current Year Lessons revenue Wages expense Other exponses Net income Current Year$ 4.950 $39,450 35,000 4,250 $ 200 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 the prior year to be used starting in current year d. An owner contributed capital by paying $600 cash in exchange for the companys stock Required Prepare the statement of cash flows for the year ended December 31, current year using the indirect method. (Lisc cash outiows as negative amounts 8 6 8 9

Explanation / Answer

Shallow waters company

Statements of cash flows for the year ended December 31

Particulars Amount($) Cash flows from Operating activities: Net income $200 Adjustments: Increase in accounts receivable ($300) Decrease in prepaid expense $40 Decrease in wages payable ($440) Net cash flows from Operating activities ($500) Cash flows from Investing activities Purchase of Equipment ($400) Net cash flows from Investing activities ($900) Cash flows from Financing activities Issue of capital $600 Net cash flows from Financing activities ($300) Beginning cash balance $4200 Ending cash balance $3900.

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