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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.)
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
Comparative Balance Sheets
December 31, 2015, and March 31, 2016
Mar. 31, 2016 Dec. 31, 2015
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
Common stock 112,000 81,000
Retained earnings 23,373 8,260
Total liabilities and equity $ 136,328 $ 92,800
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.)
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
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