Question

Santana Rey, owner of Business Solutions, decides to prepare a statement of cash flows for her business using the following financial data. BUSINESS SOLUTIONS Income Statement For Three Months Ended March 31, 2019 Computer services revenue $ 25,307 Net sales 18,693 Total revenue 44,000 Cost of goods sold $ 14,052 Depreciation expense—Office equip. 400 Depreciation expense—Computer equip. 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—Computer 960 Total expenses 25,167 Net income $ 18,833 BUSINESS SOLUTIONS Comparative Balance Sheets December 31, 2018, and March 31, 2019 Mar. 31, 2019 Dec. 31, 2018 Assets Cash $ 68,057 $ 48,372 Accounts receivable 22,867 5,668 Inventory 704 0 Computer supplies 2,005 580 Prepaid Insurance 1,110 1,665 Prepaid rent 825 825 Total current assets 95,568 57,110 Office equipment 8,000 8,000 Accumulated depreciation—Office equip. (800 ) (400 ) Computer equipment 20,000 20,000 Accumulated depreciation—Computer equip. (2,500 ) (1,250 ) Total assets $ 120,268 $ 83,460 Liabilities and Equity Accounts payable $ 0 $ 1,100 Wages payable 875 500 Unearned computer service revenue 0 1,500 Total current liabilities 875 3,100 Equity 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, 2019. Owner Santana Rey contributed $25,000 to the business in exchange for additional stock in the first quarter of 2019 and has received $4,800 in cash dividends. (Amounts to be deducted should be indicated with a minus sign.)

Answer 1