Serial Problem Business Solutions (Indirect) LO P1, P2, P3 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 $25,307 18,193 Computer services revenue Net sales Total revenue 43,500 $14,052 400 Cost of goods sold Depreciation expense-Office equipment Depreciation expense-Computer equipment Wages expense Insurance expense 1,230 2,350 505 1,775 1,215 520 230 860 Rent expense Computer supplies expense Advertising expense Mileage expense Repairs expense Computer 23,137 lotal expenses $20,363 Net income BUSINESS SOLUTIONS Comparative Balance Sheets December 31, 2015, and March 31, 2016 Dec. 31 Mar. 31, 2016 2015 Assets Cash Accounts receivable $ 77,917 $58,082 24,367 634 2,075 1,010 775 5,068 0 490 1,605 775 Inventory Computer supplies Prepaid insurance Prepaid rent 106,778 7,500 (800) 66,020 otal current assets 7,500 400) 19,800 (1,230) Office equipment Accumulated depreciation-Office equipment Computer equipment Accumulated depreciation-Computer equipment 19,800 (2,460) $130,818 $91,690 Total assets Liabilities and Equity Accounts payable Wages payable Unearned computer service revenue 0 $ 1,100 530 1,800 895 895 Total current liabilities Equity Common stock 3,430 106,000 23,923 80,000 8,260 Retained earnings $ 130,818 $91,690 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, 2016. Recall that the owner Santana Rey contributed $26,000 to the business in exchange for additional stock in the first quarter of 2016 and has received $4,700 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 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 accounts payable 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 Net cash provided 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 used in financing activities Net increase in cash Cash balance at December 31, 2015 Cash balance at March 31, 2016
