Prepare a statement of cash flows for success systems

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Reference no: EM131265312

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


$ 25,207

Net sales


18,293

Total revenue


43,500

Cost of goods sold

$ 14,352


Depreciation expense-Office equipment

320


Depreciation expense-Computer equipment

1,220


Wages expense

3,150


Insurance expense

525


Rent expense

1,975


Computer supplies expense

1,265


Advertising expense

560


Mileage expense

320


Repairs expense-Computer

930


Total expenses


24,617

Net income


$ 18,883

SUCCESS SYSTEMS

Comparative Balance Sheets

December 31, 2013, and March 31, 2014


2014

2013

Assets



Cash

$ 84,987

$ 60,852

Accounts receivable

24,067

5,068

Merchandise inventory

614

0

Computer supplies

2,075

550

Prepaid insurance

1,030

1,605

Prepaid rent

785

785

Office equipment

7,500

7,500

Accumulated depreciation-Office equipment

(640)

(320)

Computer equipment

19,600

19,600

Accumulated depreciation-Computer equipment

(2,440)

(1,220)

Total assets

$ 137,578

$ 94,420

Liabilities and Equity



Accounts payable

$ 0

$ 1,190

Wages payable

935

570

Unearned computer service revenue

0

1,700

Common stock

114,000

83,000

Retained earnings

22,643

7,960

Total liabilities and equity

$ 137,578

$ 94,420

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 $31,000 to the business in exchange for additional stock in the first quarter of 2014 and has received $4,200 in cash dividends. (Amounts to be deducted should be indicated with a minus sign.)

Reference no: EM131265312

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