Serial problem business solutions lo p1 p2 p3 p4 p5

Serial Problem Success Systems (Indirect) LO P1, P2, P3

Adria Lopez, owner of Success Systems, 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.)

SUCCESS SYSTEMS
Income Statement
For Three Months Ended March 31, 2014
Computer services revenue $ 25,207
Net sales 18,293

Total revenue 43,500
Cost of goods sold $ 14,352
Depreciation expense—Office equipment 320
Depreciation expense—Computer equipment 1,220
Wages expense 3,150
Insurance expense 525
Rent expense 1,975
Computer supplies expense 1,265
Advertising expense 560
Mileage expense 320
Repairs expense—Computer 930


Total expenses 24,617

Net income $ 18,883

SUCCESS SYSTEMS
Comparative Balance Sheets
December 31, 2013, and March 31, 2014
2014 2013
Assets
Cash $ 84,987 $ 60,852
Accounts receivable 24,067 5,068
Merchandise inventory 614 0
Computer supplies 2,075 550
Prepaid insurance 1,030 1,605
Prepaid rent 785 785
Office equipment 7,500 7,500
Accumulated depreciation—Office equipment (640 ) (320 )
Computer equipment 19,600 19,600
Accumulated depreciation—Computer equipment (2,440 ) (1,220 )


Total assets $ 137,578 $ 94,420


Liabilities and Equity
Accounts payable $ 0 $ 1,190
Wages payable 935 570
Unearned computer service revenue 0 1,700
Common stock 114,000 83,000
Retained earnings 22,643 7,960


Total liabilities and equity $ 137,578 $ 94,420

Required:
Prepare a statement of cash flows for Success Systems using the indirect method for the three months ended March 31, 2014. Recall that the owner Adria Lopez contributed $31,000 to the business in exchange for additional stock in the first quarter of 2014 and has received $4,200 in cash dividends. (Amounts to be deducted should be indicated with a minus sign.)