Serial Problem Business Solutions (Indirect) LO P2, P3 1 Santana Rey, owner of Business Solutions, decides to prepare a statement of cash flows for her business using the following financial data. 10 points $ 24,707 18,293 43,000 BUSINESS SOLUTIONS Income Statement For Three Months Ended March 31, 2020 Computer services revenue Net sales Total revenue Cost of goods sold Depreciation expense-Office equipment Depreciation expense-Computer equipment Wages expense Insurance expense Rent expense Computer supplies expense Advertising expense Mileage expense Repairs expense-Computer Total expenses Net income $14,552 360 1,210 2,350 465 2,175 1,245 540 300 940 24,137 $18,863 Dec. 31, 2019 $57,852 4,968 a 510 1,565 805 65,700 7,300 BUSINESS SOLUTIONS Comparative Balance Sheets December 31, 2019, and March 31, 2020 Mar. 31, 2020 Assets Cash $ 80,787 Accounts receivable 24,567 Inventory 654 Computer supplies 2,015 Prepaid insurance 1,070 Prepaid rent 805 Total current assets 109,898 Office equipment 7,300 Accumulated depreciation-office equipment (720) Computer equipment 19,000 Accumulated depreciation-Computer equipment (2,420) Total assets $133,058 Liabilities and Equity Accounts payable $ 0 Wages payable 935 Unearned computer service revenue 0 Total current liabilities 935 Equity Common stock 110,000 Retained earnings 22,123 Total liabilities and equity $ 133,058 (360) 19,000 (1,210) $90,430 $ 1,150 520 2,200 3,870 79,000 7,560 $90,430 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 $4,300 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 Increase in accounts receivable Decrease in inventory Increase in computer supplies Decrease in prepaid insurance Increase in wages payable Decrease in accounts payable $ Cash flows from investing activities Net cash used in investing activities Cash flows from financing activities 0 0 $ Cash balance at December 31, 2019 Cash balance at March 31, 2020 $