Question
Serial Problem Business Solutions (Indirect) LO P2, P3 Santana Rey, owner of Business Solutions, decides to prepare a statement of cash flows for her business
Serial Problem Business Solutions (Indirect) LO P2, P3
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 | $ | 24,307 | ||||
Net sales | 18,293 | |||||
Total revenue | 42,600 | |||||
Cost of goods sold | $ | 14,252 | ||||
Depreciation expenseOffice equipment | 340 | |||||
Depreciation expenseComputer equipment | 1,160 | |||||
Wages expense | 3,150 | |||||
Insurance expense | 515 | |||||
Rent expense | 2,075 | |||||
Computer supplies expense | 1,255 | |||||
Advertising expense | 500 | |||||
Mileage expense | 300 | |||||
Repairs expenseComputer | 860 | |||||
Total expenses | 24,407 | |||||
Net income | $ | 18,193 | ||||
BUSINESS SOLUTIONS | |||||||||||
Comparative Balance Sheets | |||||||||||
December 31, 2019, and March 31, 2020 | |||||||||||
Mar. 31, 2020 | Dec. 31, 2019 | ||||||||||
Assets | |||||||||||
Cash | $ | 72,457 | $ | 52,972 | |||||||
Accounts receivable | 24,367 | 5,068 | |||||||||
Inventory | 664 | 0 | |||||||||
Computer supplies | 2,015 | 490 | |||||||||
Prepaid insurance | 1,030 | 1,565 | |||||||||
Prepaid rent | 725 | 725 | |||||||||
Total current assets | 101,258 | 60,820 | |||||||||
Office equipment | 7,200 | 7,200 | |||||||||
Accumulated depreciationOffice equipment | (680 | ) | (340 | ) | |||||||
Computer equipment | 19,000 | 19,000 | |||||||||
Accumulated depreciationComputer equipment | (2,320 | ) | (1,160 | ) | |||||||
Total assets | $ | 124,458 | $ | 85,520 | |||||||
Liabilities and Equity | |||||||||||
Accounts payable | $ | 0 | $ | 1,120 | |||||||
Wages payable | 905 | 540 | |||||||||
Unearned computer service revenue | 0 | 2,200 | |||||||||
Total current liabilities | 905 | 3,860 | |||||||||
Equity | |||||||||||
Common stock | 102,000 | 74,000 | |||||||||
Retained earnings | 21,553 | 7,660 | |||||||||
Total liabilities and equity | $ | 124,458 | $ | 85,520 | |||||||
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 $28,000 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.)
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