Prepare a statement of cash flows for business solutions

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Reference no: EM131922774

Problem - Santana Rey, owner of Business Solutions, decides to prepare a statement of cash flows for her business.

BUSINESS SOLUTIONS Income Statement For Three Months Ended March 31, 2012

Computer services revenue


$25,107

Net sales


18,093

Total revenue


43,200

Cost of goods sold

$14,952


Depreciation expense-Office equipment

360


Depreciation expense-Computer equipment

1,160


Wages expense

3,250


Insurance expense

525


Rent expense

2,275


Computer supplies expense

1,245


Advertising expense

560


Mileage expense

310


Repairs expense-Computer

920


Total expenses


25,557

Net income


17,643

 

BUSINESS SOLUTIONS Comparative Balance Sheets December 31, 2011, and March 31, 2012


2012

2011

Assets



Cash

$78,657

$52,442

Accounts receivable

24,567

5,468

Merchandise inventory

604

0

Computer supplies

2,065

500

Prepaid insurance

1,020

1,635

Prepaid rent

815

815

Office equipment

7,900

7,900

Accumulated depreciation-Office equipment

(720)

(360)

Computer equipment

19,000

19,000

Accumulated depreciation-Computer equipment

(2,320)

(1,160)

Total assets

$131,588

$86,240

Liabilities and Equity



Accounts payable

$0

$1,150

Wages payable

885

530

Unearned computer service revenue

0

1,800

Common stock

110,000

75,000

Retained earnings

20,703

7,760

Total liabilities and equity

$131,588

$86,240

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.

Reference no: EM131922774

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