Shallow Waters Company was started several years ago by two diving instructors.
ID: 2592333 • Letter: S
Question
Shallow 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 Balance Sheet at December 31 Cash 4.200 S3.900 110 S 5.310 Accounts receivable Propaid expenses 4.960 1400 4.950 $ 960 Wages payable Contributed capital Retained earnings $ 5,310 Income Statement for Current Year Lessons revenue Wages expense $39,450 35,000 4,250 s 200 Net income 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 company's stock Required Prepare the statement of cash flows for the year ended December 31, current year, using the indirect method. (List cash outflows as negative amounts.) Statement of Cash Flows Cash fows from operating acivities to reconcile net income to net cash provided by operating activtiesExplanation / Answer
Answer
Statement of Cash Flows
Working
For the year ended Dec 31, Current Year
Cash flows from Operating activities:
Net Income
200
Adjustments to reconcile net income to net cash provided by operating activities
Increase in accounts receivables
-300
Decrease in Prepaid expenses
40
Decrease in Wages payable
-440
A
Cash flows from Operating Activities
-500
Cash flows from Investing activities
Purchase of equipments
-400
B
Cash flows from Investing Activities
-400
Cash flows from financing activities:
Capital contributed
600
C
Cash flows from Financing activities
600
D=A+B+C
Net Increase(Decrease) in cash
-300
E
Add: Cash at the beginning of year
4200
F=D+E
Cash at the end of year
3900
Statement of Cash Flows
Working
For the year ended Dec 31, Current Year
Cash flows from Operating activities:
Net Income
200
Adjustments to reconcile net income to net cash provided by operating activities
Increase in accounts receivables
-300
Decrease in Prepaid expenses
40
Decrease in Wages payable
-440
A
Cash flows from Operating Activities
-500
Cash flows from Investing activities
Purchase of equipments
-400
B
Cash flows from Investing Activities
-400
Cash flows from financing activities:
Capital contributed
600
C
Cash flows from Financing activities
600
D=A+B+C
Net Increase(Decrease) in cash
-300
E
Add: Cash at the beginning of year
4200
F=D+E
Cash at the end of year
3900
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