ACCOUNTING

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

Order now and get 10% discount on all orders above $50 now!!The professional are ready and willing handle your assignment.

ORDER NOW »»