Problem - Santana Rey, owner of Business Solutions, decides to prepare a statement of cash flows for her business.
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BUSINESS SOLUTIONS Income Statement For Three Months Ended March 31, 2012
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Computer services revenue
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$25,107
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Net sales
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18,093
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Total revenue
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43,200
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Cost of goods sold
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$14,952
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Depreciation expense-Office equipment
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360
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Depreciation expense-Computer equipment
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1,160
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Wages expense
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3,250
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Insurance expense
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525
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Rent expense
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2,275
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Computer supplies expense
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1,245
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Advertising expense
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560
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Mileage expense
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310
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Repairs expense-Computer
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920
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Total expenses
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25,557
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Net income
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17,643
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BUSINESS SOLUTIONS Comparative Balance Sheets December 31, 2011, and March 31, 2012
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2012
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2011
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Assets
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Cash
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$78,657
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$52,442
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Accounts receivable
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24,567
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5,468
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Merchandise inventory
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604
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0
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Computer supplies
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2,065
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500
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Prepaid insurance
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1,020
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1,635
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Prepaid rent
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815
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815
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Office equipment
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7,900
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7,900
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Accumulated depreciation-Office equipment
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(720)
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(360)
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Computer equipment
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19,000
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19,000
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Accumulated depreciation-Computer equipment
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(2,320)
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(1,160)
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Total assets
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$131,588
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$86,240
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Liabilities and Equity
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Accounts payable
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$0
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$1,150
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Wages payable
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885
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530
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Unearned computer service revenue
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0
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1,800
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Common stock
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110,000
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75,000
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Retained earnings
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20,703
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7,760
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Total liabilities and equity
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$131,588
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$86,240
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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 $35,000 to the business in exchange for additional stock in the first quarter of 2012 and has received $4,700 in cash dividends.