2

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				$	24,507
Net sales					18,293
Total revenue					42,800
Cost of goods sold	$	14,252
Depreciation expenseOffice equipment		340
Depreciation expenseComputer equipment		1,160
Wages expense		2,650
Insurance expense		535
Rent expense		2,475
Computer supplies expense		1,225
Advertising expense		560
Mileage expense		280
Repairs expenseComputer		940
Total expenses					24,417
Net income				$	18,383

BUSINESS SOLUTIONS
Comparative Balance Sheets
December 31, 2015, and March 31, 2016
	Mar. 31, 2016				Dec. 31, 2015
Assets
Cash	$	74,367			$	52,272
Accounts receivable		24,467				5,568
Inventory		654				0
Computer supplies		2,085				500
Prepaid insurance		1,040				1,615
Prepaid rent		735				735
Total current assets		103,348				60,690
Office equipment		7,300				7,300
Accumulated depreciationOffice equipment		(680	)			(340	)
Computer equipment		19,300				19,300
Accumulated depreciationComputer equipment		(2,320	)			(1,160	)
Total assets	$	126,948			$	85,790
Liabilities and Equity
Accounts payable	$	0			$	1,120
Wages payable		905				510
Unearned computer service revenue		0				1,700
Total current liabilities		905				3,330
Equity
Common stock		105,000				75,000
Retained earnings		21,043				7,460
Total liabilities and equity	$	126,948			$	85,790

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 $30,000 to the business in exchange for additional stock in the first quarter of 2016 and has received $4,800 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, 2016
Cash flows from operating activities
Adjustments to reconcile net income to net cash provided by operating activities
		$0
Cash flows from investing activities
Net cash used in investing activities		0
Cash flows from financing activities
		0
		$0
Cash balance at December 31, 2015
Cash balance at March 31, 2016		$0

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