low w rs Company was staned several years ago by two dng nstructors. The company

Question

low w rs Company was staned several years ago by two dng nstructors. The companys comparative balrce sheets and incarne saterem are presented below, along addional nformat Sheet at December 31 3,600 3.,900 Accounts necevable capita Reta ned nceme Statement for Current Other expenses 2,100 2.36000 38,450 4.150 Adcitional Data a. Propaid expensas relato to rent paid in advance b. Oher expenses were paid in cash c. Purchased equipment for $400 cash at the end of the prior year to be used starting in curment year. d. An owner contriouted capital by paying $800 cash in exchange for the company's stock Required Prepare the statement of cash nos tor the year ended December 31, current year using indirect method (List cash outflows as negative amounts.)

Explanation / Answer

Cash flow Statement cash flow From operating activities: Net Income for the period 300 Adjustment required: Increase in Accounts receivable -300 Decrease in prepaid expense 40 Decreases in Wwages payable -440 Net cash used in operating activities -400 Cash flows from investing activities: Purchase of Equipment -400 Net cash used in Investing activities -400 Cash flows from Financing activities Issue of Common Stock 500 Net cash provided from financing activities 500 Net decrease in cash -300 Beginning balance of cash 3900 Ending balance of cash 3600

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