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				$	24,707
Net sales					18,093
Total revenue					42,800
Cost of goods sold	$	14,352
Depreciation expense—Office equipment		310
Depreciation expense—Computer equipment		1,250
Wages expense		2,250
Insurance expense		535
Rent expense		1,775
Computer supplies expense		1,275
Advertising expense		550
Mileage expense		300
Repairs expense—Computer		900
Total expenses					23,497
Net income				$	19,303

BUSINESS SOLUTIONS
Comparative Balance Sheets
December 31, 2017, and March 31, 2018
	Mar. 31, 2018				Dec. 31, 2017
Assets
Cash	$	85,217			$	59,812
Accounts receivable		24,367				4,868
Inventory		644				0
Computer supplies		2,025				490
Prepaid insurance		1,070				1,635
Prepaid rent		765				765
Total current assets		114,088				67,570
Office equipment		7,300				7,300
Accumulated depreciation—Office equipment		(600	)			(300	)
Computer equipment		19,200				19,200
Accumulated depreciation—Computer equipment		(2,480	)			(1,240	)
Total assets	$	137,508			$	92,530
Liabilities and Equity
Accounts payable	$	0			$	1,110
Wages payable		945				560
Unearned computer service revenue		0				2,000
Total current liabilities		945				3,670
Equity
Common stock		115,000				81,000
Retained earnings		21,563				7,860
Total liabilities and equity	$	137,508			$	92,530

 
Required:
Prepare a statement of cash flows for Business Solutions using the indirect method for the three months ended March 31, 2018. Owner Santana Rey contributed $34,000 to the business in exchange for additional stock in the first quarter of 2018 and has received $4,500 in cash dividends. (Amounts to be deducted should be indicated with a minus sign.)

 

Transcribed Image Text:

BUSINESS SOLUTIONS Statement of Cash Flows (Indirect) For Quarter Ended March 31, 2018 Cash flows from operating activities Adjustments to reconcile net income to net cash provided by operating activities $ Cash flows from investing activities Net cash used in investing activities Cash flows from financing activities Cash balance at December 31, 2017 Cash balance at March 31, 2018 BUSINESS SOLUTIONS Statement of Cash Flows (Indirect) For Quarter Ended March 31, 2018 Cash flows from operating activities Adjustments to reconcile net income to net cash provided by operating activities $ Cash flows from investing activities Net cash used in investing activities Cash flows from financing activities Cash balance at December 31, 2017 Cash balance at March 31, 2018

Answer rating: 100% (QA)

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