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

$

24,407

Net sales

17,793

Total revenue

42,200

Cost of goods sold

$

14,752

Depreciation expenseOffice equipment

360

Depreciation expenseComputer equipment

1,240

Wages expense

2,350

Insurance expense

485

Rent expense

1,675

Computer supplies expense

1,265

Advertising expense

590

Mileage expense

270

Repairs expenseComputer

940

Total expenses

23,927

Net income

$

18,273

BUSINESS SOLUTIONS

Comparative Balance Sheets

December 31, 2015, and March 31, 2016

Mar. 31, 2016

Dec. 31, 2015

Assets

Cash

$

79,607

$

53,652

Accounts receivable

23,767

4,868

Inventory

694

0

Computer supplies

2,015

510

Prepaid insurance

1,030

1,575

Prepaid rent

805

805

Total current assets

107,918

61,410

Office equipment

7,700

7,700

Accumulated depreciationOffice equipment

(720

)

(360

)

Computer equipment

19,900

19,900

Accumulated depreciationComputer equipment

(2,480

)

(1,240

)

Total assets

$

132,318

$

87,410

Liabilities and Equity

Accounts payable

$

0

$

1,160

Wages payable

885

590

Unearned computer service revenue

0

2,000

Total current liabilities

885

3,750

Equity

Common stock

110,000

76,000

Retained earnings

21,433

7,660

Total liabilities and equity

$

132,318

$

87,410

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 $34,000 to the business in exchange for additional stock in the first quarter of 2016 and has received $4,500 in cash dividends.

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
Cash flows from investing activities
Net cash used in investing activities		0
Cash flows from financing activities
Cash balance at December 31, 2015
Cash balance at March 31, 2016