13.
Serial Problem Business Solutions (Indirect) LO P2, P3 Santana Rey, owner of Business Solutions, decides to prepare a statement of cash flows for her business using the following financial data. $25, 207 18,193 43,400 BUSINESS SOLUTIONS Income Statement For Three Months Ended March 31, 2020 Computer services revenue Net sales Total revenue Cost of goods sold $14,452 Depreciation expense-Office equipment 390 Depreciation expense-Computer equipment 1,240 Wages expense 3,150 Insurance expense 515 Rent expense 2,375 Computer supplies expense 1,235 Advertising expense 560 Mileage expense 240 Repairs expense-Computer 940 Total expenses Net income 25,097 $18,303 Dec. 31, 2019 BUSINESS SOLUTIONS Comparative Balance Sheets December 31, 2019, and March 31, 2020 Mar. 31, 2020 Assets Cash $ 77,877 Accounts receivable 24,167 Inventory 684 Computer supplies 2,035 Prepaid insurance 1,050 Prepaid rent 765 Total current assets 106,578 Office equipment 7,800 Accumulated depreciation-office equipment (780) Computer equipment 19,700 Accumulated depreciation-Computer equipment (2,480) Total assets $130,818 Liabilities and Equity Accounts payable $ 0 Wages payable 955 Unearned computer service revenue 0 Total current liabilities 955 Equity Common stock 108,000 Retained earnings 21,863 Total liabilities and equity $130,818 $54,822 5,168 0 530 1,655 765 62,940 7,800 (390) 19,700 (1,240) $88,810 $ 1,170 580 1,900 3,650 77,000 8,160 $88,810 Required: Prepare a statement of cash flows for Business Solutions using the indirect method for the three months ended March 31, 2020. Owner Santana Rey contributed $31,000 to the business in exchange for additional stock in the first quarter of 2020 and has received $4,600 in cash dividends. (Amounts to be deducted should be indicated with a minus sign.) BUSINESS SOLUTIONS Statement of Cash Flows (Indirect) For Quarter Ended March 31, 2020 Cash flows from operating activities Net income $ 18,303 Adjustments to reconcile net income to net cash provided by operating activities Increase in accounts receivable Increase in inventory Increase in computer supplies Increase in wages payable Decrease in unearned computer service revenue Depreciation expense-Computer equipment Depreciation expense-Office equipment $ 18,303 Net cash used by operating activities Cash flows from investing activities Net cash used in investing activities Cash flows from financing activities Cash received from stock issuance Cash paid for dividends Net cash provided by financing activities 0 Net increase in cash $ 18,303 Cash balance at December 31, 2019 Cash balance at March 31, 2020 $ 18,303
