Prepare a statement of cash flows for business solutions

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Reference no: EM13507488

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, 2012

Computer service revenue

25,307

Net sales

18,693

Total revenue

44,000

Cost of goods sold

14,052

Depreciation expense - Office equipment

400

Depreciation expense - Computer 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 expense

960

Total expenses

25,167

Net income

$18,833

Business Solutions

Comparative Balance Sheets

December 31, 2011 and March 31, 2012

Assets



Cash

68,057

48,372

Accounts receivable

22,867

5,668

Merchandise inventory

704

-

Computer supplies

2,005

580

Prepaid insurance

1,110

1,665

Prepaid rent

825

825

Office equipment

8,000

8,000

Accumulated depreciation - Office equipment

(800)

(400)

Computer equipment

20,000

20,000

Accumulated depreciation - Computer equipment

(2,500)

(1,250)

Total Assets

$120,268

$83,460

Liabilities and Equity

Accounts payable

-

1,100

Wages payable

875

500

Unearned computer service revenue

-

1,500

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, 2012. Recall that the owner Santana Rey contributed $25,000 to the business in exchange for additional stock in the first quarter of 2012 and has received $4,800 in cash dividends.

Reference no: EM13507488

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