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. Current Year Prior Year
Balance Sheet at December 31
Cash $4,000 $4,500
Accounts receivable 1,300 800
Prepaid expenses 100 250
Equipment 700 0
$6,100 $5,550
Wages payable $650 $1,100
Common stock and additional
paid-in capital 1,700 1,400
Retained earnings 3,750 3,050
$6,100 $5,550
Income Statement for Current Year
Lessons revenue $34,550
Wages expense 30,200
Other expenses 3,650
Net income $700
Additional Data:
a. Prepaid expenses relate to rent paid in advance.
b. Other expenses were paid in cash.
c. Purchased equipment for $700 cash at the end of the current year to be used starting in following year.
d. An owner contributed capital by paying $300 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.)