Accounting HW

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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, 2016
  Computer services revenue   $25,107  
  Net sales    18,493  
    

  Total revenue    43,600  
  Cost of goods sold$14,152   
  Depreciation expense—Office equipment 400   
  Depreciation expense—Computer equipment 1,180   
  Wages expense 2,550   
  Insurance expense 465   
  Rent expense 2,175   
  Computer supplies expense 1,275   
  Advertising expense 520   
  Mileage expense 230   
  Repairs expense—Computer 940   
 

   
  Total expenses    23,887  
    

  Net income   $19,713  
    






 

BUSINESS SOLUTIONS
Comparative Balance Sheets
December 31, 2015, and March 31, 2016
 Mar. 31, 2016 Dec. 31, 2015
  Assets       
  Cash$83,397  $58,952 
  Accounts receivable 24,467   5,368 
  Inventory 674   0 
  Computer supplies 2,035   520 
  Prepaid insurance 1,040   1,665 
  Prepaid rent 775   775 
 


 


  Total current assets 112,388   67,280 
  Office equipment 7,200   7,200 
  Accumulated depreciation—Office equipment (800)  (400)
  Computer equipment 19,900   19,900 
  Accumulated depreciation—Computer equipment (2,360)  (1,180)
 


 


  Total assets$136,328  $92,800 
 





 





  Liabilities and Equity       
  Accounts payable$0  $1,180 
  Wages payable 955   560 
  Unearned computer service revenue 0   1,800 
 


 


  Total current liabilities 955   3,540 
  Equity       
  Common stock 112,000   81,000 
  Retained earnings 23,373   8,260 
 


 


  Total liabilities and equity$136,328  $92,800 
 





 






  

Required:

Prepare a statement of cash flows for Business Solutions using the indirect method for the three months ended March 31, 2016. Recall that the owner Santana Rey contributed $31,000 to the business in exchange for additional stock in the first quarter of 2016 and has received $4,600 in cash dividends. (Amounts to be deducted should be indicated with a minus sign.)

 

 

References
eBook & Resources
WorksheetLearning Objective: 12-P1 Prepare a statement of cash flows.Learning Objective: 12-P3 Determine cash flows from both investing and financing activities.
Difficulty: 3 HardLearning Objective: 12
 
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