E12-18 (Algo) Preparing a Statement of Cash Flows (Indirect Method) LO12-2, 12-4, 12-6 Computer Service and Repair was started five years ago by two college roommates. 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 Accounts receivable Prepaid expenses Equipment Accumulated depreciation Wages payable Short-term note payable $ 5,610 $7,210 1,000 560 400 80 470 0 (80) 0 $ 7,400 $7,850 $ 410 $1,400 270 0 Common stock 2,200 2,200 Retained earnings 4,520 4,250 $ 7,400 $7,850 Income Statement for Current Year Service revenue $40,000 Depreciation expense 80 Salaries expense 33,000 Other expenses 6,650 Net income $ 270 Additional Data: a. Prepaid expenses relate to rent paid in advance. b. Other expenses were paid in cash. c. Purchased equipment for $470 cash at the beginning of the current year and recorded $80 of depreciation expense at the end of the current year. d. At the end of the current year, the company signed a short-term note payable to the bank for $270. 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.) COMPUTER SERVICE AND REPAIR Statement of Cash Flows For the Year Ended December 31, Current Year Cash flows from operating activities: Net income Adjustments to reconcile net income to net cash provided by operating activities: Depreciation Increase in accounts receivable Increase in prepaid expenses Decrease in wages payable Increase in accounts receivable Net cash provided by operating activities Cash flows from investing activities: Cash paid for equipment Cash flows from financing activities: $ 270 80 350 0 0 $ 0