Santana Rey, Owner Of Business Solutions, Decides To Prepare A Statement Of Cash Flows For Her Business. (Although The Serial...

Santana Rey, owner of Business Solutions, decides to prepare a statement of cash flows for her business. (Although the serial problem allowed for various ownership changes in earlier chapters, we will prepare the statement of cash flows using the following financial data.)

BUSINESS SOLUTIONS

Income Statement

For Three Months Ended March 31, 2016

  Computer services revenue $ 25,107

  Net sales 18,493

  Total revenue 43,600

  Cost of goods sold $ 14,152

  Depreciation expense—Office equipment 400

  Depreciation expense—Computer equipment 1,180

  Wages expense 2,550

  Insurance expense 465

  Rent expense 2,175

  Computer supplies expense 1,275

  Advertising expense 520

  Mileage expense 230

  Repairs expense—Computer 940

  Total expenses 23,887

  Net income $ 19,713

BUSINESS SOLUTIONS

Comparative Balance Sheets

December 31, 2015, and March 31, 2016

  Mar. 31, 2016 Dec. 31, 2015

  Assets

  Cash $ 83,397 $ 58,952

  Accounts receivable 24,467 5,368

  Inventory 674 0

  Computer supplies 2,035 520

  Prepaid insurance 1,040 1,665

  Prepaid rent 775 775

  Total current assets 112,388 67,280

  Office equipment 7,200 7,200

  Accumulated depreciation—Office equipment (800 ) (400 )

  Computer equipment 19,900 19,900

  Accumulated depreciation—Computer equipment (2,360 ) (1,180 )

  Total assets $ 136,328 $ 92,800

  Liabilities and Equity

  Accounts payable $ 0 $ 1,180

  Wages payable 955 560

  Unearned computer service revenue 0 1,800

  Total current liabilities 955 3,540

  Equity

  Common stock 112,000 81,000

  Retained earnings 23,373 8,260

  Total liabilities and equity $ 136,328 $ 92,800

Required:

Prepare a statement of cash flows for Business Solutions using the indirect method for the three months ended March 31, 2016. Recall that the owner Santana Rey contributed $31,000 to the business in exchange for additional stock in the first quarter of 2016 and has received $4,600 in cash dividends. (Amounts to be deducted should be indicated with a minus sign.)

References

eBook & Resources

WorksheetLearning Objective: 12-P1 Prepare a statement of cash flows.Learning Objective: 12-P3 Determine cash flows from both investing and financing activities.

Difficulty: 3 HardLearning Objective: 12