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				$	24,807
Net sales					18,193
Total revenue					43,000
Cost of goods sold	$	14,752
Depreciation expenseOffice equipment		400
Depreciation expenseComputer equipment		1,170
Wages expense		2,450
Insurance expense		525
Rent expense		1,775
Computer supplies expense		1,255
Advertising expense		530
Mileage expense		250
Repairs expenseComputer		920
Total expenses					24,027
Net income				$	18,973

SUCCESS SYSTEMS
Comparative Balance Sheets
December 31, 2013, and March 31, 2014
	2014				2013
Assets
Cash	$	83,547			$	56,542
Accounts receivable		24,467				4,668
Merchandise inventory		604				0
Computer supplies		2,025				530
Prepaid insurance		1,010				1,665
Prepaid rent		785				785
Office equipment		7,500				7,500
Accumulated depreciationOffice equipment		(800	)			(400	)
Computer equipment		19,600				19,600
Accumulated depreciationComputer equipment		(2,340	)			(1,170	)
Total assets	$	136,398			$	89,720
Liabilities and Equity
Accounts payable	$	0			$	1,180
Wages payable		965				580
Unearned computer service revenue		0				1,700
Common stock		112,000				78,000
Retained earnings		23,433				8,260
Total liabilities and equity	$	136,398			$	89,720

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 $34,000 to the business in exchange for additional stock in the first quarter of 2014 and has received $3,800 in cash dividends. (Amounts to be deducted should be indicated with a minus sign.)

With a minus sign.) SUCCESS SYSTEMS Statement of Cash Flows (Indirect) For Quarter Ended March 31, 2014 Cash flows from operating activities Net income Adjustments to reconcile net income to net cash provided by operating activities Depreciation expense-computer Equipment Increase in accounts receivable Increase in inventory Increase in computer supplies Decrease in prepaid insurance Increase in wages payable Decrease in accounts payable Decrease in unearned computer service revenue $ Cash flows from investing activities Net cash used in investing activities 0 Cash flows from financing activities Cash paid for dividends Net cash used in financing activities 0 Net increase in cash Cash balance at December 31, 2013 0 Cash balance at March 31, 2014