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, 2012
|
Computer service revenue
|
25,307
|
|
Net sales
|
18,693
|
|
Total revenue
|
44,000
|
|
Cost of goods sold
|
14,052
|
|
Depreciation expense - Office equipment
|
400
|
|
Depreciation expense - Computer equipment
|
1,250
|
|
Wages expense
|
3,250
|
|
Insurance expense
|
555
|
|
Rent expense
|
2,475
|
|
Computer supplies expense
|
1,305
|
|
Advertising expense
|
600
|
|
Mileage expense
|
320
|
|
Repairs expense
|
960
|
|
Total expenses
|
25,167
|
|
Net income
|
$18,833
|
Business Solutions
Comparative Balance Sheets
December 31, 2011 and March 31, 2012
|
Assets
|
|
|
|
Cash
|
68,057
|
48,372
|
|
Accounts receivable
|
22,867
|
5,668
|
|
Merchandise inventory
|
704
|
-
|
|
Computer supplies
|
2,005
|
580
|
|
Prepaid insurance
|
1,110
|
1,665
|
|
Prepaid rent
|
825
|
825
|
|
Office equipment
|
8,000
|
8,000
|
|
Accumulated depreciation - Office equipment
|
(800)
|
(400)
|
|
Computer equipment
|
20,000
|
20,000
|
|
Accumulated depreciation - Computer equipment
|
(2,500)
|
(1,250)
|
|
Total Assets
|
$120,268
|
$83,460
|
|
Liabilities and Equity
|
|
Accounts payable
|
-
|
1,100
|
|
Wages payable
|
875
|
500
|
|
Unearned computer service revenue
|
-
|
1,500
|
|
Common stock
|
98,000
|
73,000
|
|
Retained earnings
|
21,393
|
7,360
|
|
Total Liabilities and Equity
|
$120,268
|
$83,460
|
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 $25,000 to the business in exchange for additional stock in the first quarter of 2012 and has received $4,800 in cash dividends.