Deep 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.

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 2012 to be used starting in 2013.
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, 2012, using the indirectmethod.

Transcribed Image Text:

2012 2011 Balance Sheet at December 31 $ 3,700 $4,000 Cash Accounts receivable 900 800 Prepaid expenses Equipment 100 50 400 $ 5,100 $ 450 $4,850 Wages payable Contributed capital Retained earnings $1,100 1,000 2,750 1,600 3,050 $ 5,100 $4,850 Income Statement for 2012 $33,950 Lessons revenue Wages expense Other expenses 30,000 3,650 $ 300 Net income