Question - Dive In Company was started several years ago by two diving instructors. The company's comparative balance sheets and income statement are presented below.
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Current Year
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Previous Year
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Balance Sheet at December 31
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Cash
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$4,600
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$5,450
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Account Receivable
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2,000
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1,000
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Prepaid Expenses
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200
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100
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$6,800
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$6,550
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Salaries and Wages Payable
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$850
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$2,100
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Common stock
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2,200
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1,500
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Retained Earnings
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3,750
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2,950
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$6,800
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$6,550
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Income Statement
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Service Revenue
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$44,950
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Salaries and Wagers Expense
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40,000
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Other Operating Expenses
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4,150
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Net Income
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$800
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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 $700 cash in exchange for the company's stock.
Required: Prepare the statement of cash ?ows for the current year ended December 31 using the direct method.