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Santana Rey, owner of Business Solutions, decides to prepare a statement of cash flows for her business using the following financial data. BUSINESS SOLUTIONS Income
Santana Rey, owner of Business Solutions, decides to prepare a statement of cash flows for her business using the following financial data. BUSINESS SOLUTIONS Income Statement For Three Months Ended March 31, 2020 Computer services revenue $25,007 Net sales 18,093 Total revenue 43, 100 Cost of goods sold $14,752 Depreciation expense-Office equipment 340 Depreciation expense-Computer equipment 1,180 Wages expense 2,750 Insurance expense Rent expense 2,475 Computer supplies expense 1,295 Advertising expense 560 Mileage expense 280 900 Repairs expense-Computer Total expenses 24,997 $18, 103 Net income 465 BUSINESS SOLUTIONS Comparative Balance Sheets December 31, 2019, and March 31, 2020 Assets Mar. 31, 2020 Dec. 31, 2019 Cash Accounts receivable $ 74,027 $54,492 23,667 Inventory 5,268 694 Computer supplies 2,065 490 Prepaid insurance 1,060 1,635 Prepaid rent 765 765 Total current assets 102,278 62,650 Office equipment 7,700 7,700 Accumulated depreciation-office equipment (680) (340) Computer equipment 19, 100 19, 100 Accumulated depreciation-Computer equipment (2,360) (1,180) Total assets $126,038 $87,930 Liabilities and Equity Accounts payable 0 $ 1,160 Wages payable 975 510 0 Unearned computer service revenue 2,100 Total current liabilities 975 3,770 Equity Common stock 103,000 76,000 22,063 8,160 Retained earnings $126,038 $87,930 Total liabilities and equity 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 $27,000 to the business in exchange for additional stock in the first quarter of 2020 and has received $4,200 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 Adjustments to reconcile net income to net cash provided by operating activities Depreciation expense-Office equipment Depreciation expense-Computer equipment Increase in accounts receivable Increase in inventory Increase in computer supplies Decrease in prepaid insurance Decrease in accounts payable Increase in wages payable Decrease in unearned computer service revenue $ 0 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 0 $ 0 Cash balance at December 31, 2019 Cash balance at March 31, 2020 $ $ 0
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