Santana Rey, owner of Business Solutions, decides to prepare a statement of cash flows for her business. (Although the serial...

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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.)

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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