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Serial Problem Success Systems (Indirect) LO P1, P2, P3
Adria Lopez, owner of Success Systems, 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.)
SUCCESS SYSTEMS
Income Statement
For Three Months Ended March 31, 2014
Computer services revenue
$ 25,207
Net sales
18,293
Total revenue
43,500
Cost of goods sold
$ 14,352
Depreciation expense-Office equipment
320
Depreciation expense-Computer equipment
1,220
Wages expense
3,150
Insurance expense
525
Rent expense
1,975
Computer supplies expense
1,265
Advertising expense
560
Mileage expense
Repairs expense-Computer
930
Total expenses
24,617
Net income
$ 18,883
Comparative Balance Sheets
December 31, 2013, and March 31, 2014
2014
2013
Assets
Cash
$ 84,987
$ 60,852
Accounts receivable
24,067
5,068
Merchandise inventory
614
0
Computer supplies
2,075
550
Prepaid insurance
1,030
1,605
Prepaid rent
785
Office equipment
7,500
Accumulated depreciation-Office equipment
(640)
(320)
Computer equipment
19,600
Accumulated depreciation-Computer equipment
(2,440)
(1,220)
Total assets
$ 137,578
$ 94,420
Liabilities and Equity
Accounts payable
$ 0
$ 1,190
Wages payable
935
570
Unearned computer service revenue
1,700
Common stock
114,000
83,000
Retained earnings
22,643
7,960
Total liabilities and equity
Required:
Prepare a statement of cash flows for Success Systems using the indirect method for the three months ended March 31, 2014. Recall that the owner Adria Lopez contributed $31,000 to the business in exchange for additional stock in the first quarter of 2014 and has received $4,200 in cash dividends. (Amounts to be deducted should be indicated with a minus sign.)
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