Dive In Company was started several years ago by two diving instructors. The company's comparative balance sheets and income statement are presented as follows.

Additional Data:
a. Rent is paid in advance each month, and Office Expenses are paid in cash as incurred.
b. An owner contributed capital by paying $200 cash in exchange for the company's stock.
Required:
1. Prepare the statement of cash flows for the current year ended December 31 using the indirect method.
2. Use the statement of cash flows to evaluate the company's cash flows.

Transcribed Image Text:

Current Year Previous Year Balance Sheet at December 31 3.200 1000 100 $4.300 $ 350 1.200 2.750 $4,300 $4.000 500 50 $4,550 $1.100 1,000 2.450 $4,550 Cash Accounts Receivable Prepaid Rent Salaries and Wages Payable Common Stock Retained Earnings Income Statement Service Revenu Salaries and Wages Expense Rent and Office Expenses $33.950 30,000 3,650 $ 300 Net Income