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, 2020
Computer services revenue				$	25,207
Net sales					18,593
Total revenue					43,800
Cost of goods sold	$	14,552
Depreciation expense—Office equipment		360
Depreciation expense—Computer equipment		1,220
Wages expense		2,650
Insurance expense		545
Rent expense		2,375
Computer supplies expense		1,275
Advertising expense		510
Mileage expense		310
Repairs expense—Computer		910
Total expenses					24,707
Net income				$	19,093

BUSINESS SOLUTIONS
Comparative Balance Sheets
December 31, 2019, and March 31, 2020
	Mar. 31, 2020						Dec. 31, 2019
Assets
Cash		$	76,327					$	52,972
Accounts receivable			23,667						5,168
Inventory			644						0
Computer supplies			2,015						500
Prepaid insurance			1,060						1,625
Prepaid rent			805						805
Total current assets			104,518						61,070
Office equipment			7,000						7,000
Accumulated depreciation—Office equipment			(720	)					(360	)
Computer equipment			19,600						19,600
Accumulated depreciation—Computer equipment			(2,440	)					(1,220	)
Total assets		$	127,958					$	86,090
Liabilities and Equity
Accounts payable		$	0					$	1,180
Wages payable			905						550
Unearned computer service revenue			0						2,100
Total current liabilities			905						3,830
Equity
Common stock			104,000						74,000
Retained earnings			23,053						8,260
Total liabilities and equity		$	127,958					$	86,090

Required:
Prepare a statement of cash flows for Business Solutions using the indirect method for the three months ended March 31, 2020. Owner Santana Rey contributed $30,000 to the business in exchange for additional stock in the first quarter of 2020 and has received $4,300 in cash dividends. (Amounts to be deducted should be indicated with a minus sign.)

Answer 1

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