Question
Serial Problem Business Solutions (Indirect) LO P2, P3 Santana Rey, the owner of Business Solutions, decides to prepare a statement of cash flows for her
Serial Problem Business Solutions (Indirect) LO P2, P3
Santana Rey, the 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 | $ | 25,307 | ||||
Net sales | 18,693 | |||||
Total revenue | 44,000 | |||||
Cost of goods sold | $ | 14,052 | ||||
Depreciation expenseOffice equipment | 400 | |||||
Depreciation expenseComputer equipment | 1,250 | |||||
Wages expense | 3,250 | |||||
Insurance expense | 555 | |||||
Rent expense | 2,475 | |||||
Computer supplies expense | 1,305 | |||||
Advertising expense | 600 | |||||
Mileage expense | 320 | |||||
Repairs expenseComputer | 960 | |||||
Total expenses | 25,167 | |||||
Net income | $ | 18,833 | ||||
BUSINESS SOLUTIONS | |||||||||||
Comparative Balance Sheets | |||||||||||
December 31, 2019, and March 31, 2020 | |||||||||||
Mar. 31, 2020 | Dec. 31, 2019 | ||||||||||
Assets | |||||||||||
Cash | $ | 68,057 | $ | 48,372 | |||||||
Accounts receivable | 22,867 | 5,668 | |||||||||
Inventory | 704 | 0 | |||||||||
Computer supplies | 2,005 | 580 | |||||||||
Prepaid Insurance | 1,110 | 1,665 | |||||||||
Prepaid rent | 825 | 825 | |||||||||
Total current assets | 95,568 | 57,110 | |||||||||
Office equipment | 8,000 | 8,000 | |||||||||
Accumulated depreciationOffice equipment | (800 | ) | (400 | ) | |||||||
Computer equipment | 20,000 | 20,000 | |||||||||
Accumulated depreciationComputer equipment | (2,500 | ) | (1,250 | ) | |||||||
Total assets | $ | 120,268 | $ | 83,460 | |||||||
Liabilities and Equity | |||||||||||
Accounts payable | $ | 0 | $ | 1,100 | |||||||
Wages payable | 875 | 500 | |||||||||
Unearned computer service revenue | 0 | 1,500 | |||||||||
Total current liabilities | 875 | 3,100 | |||||||||
Equity | |||||||||||
Common stock | 98,000 | 73,000 | |||||||||
Retained earnings | 21,393 | 7,360 | |||||||||
Total liabilities and equity | $ | 120,268 | $ | 83,460 | |||||||
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 $25,000 to the business in exchange for additional stock in the first quarter of 2020 and has received $4,800 in cash dividends. (Amounts to be deducted should be indicated with a minus sign.)
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