Question

SUCCESS SYSTEMS Comparative Balance Sheets December 31, 2007 and Mardi 31, 2008 2008 2007 SUCCESS SYSTEMS Income Statement For Three Months Ended Mardi 31, 2008 $ 87,266 24,400 680 1,950 $31,850 20,345 52,195 Assets Cash .... Accounts receivable ...... Merchandise Inventory ..... Computer supplies ......... Prepaid insurance ........... Prepaid rent ................. Office equipment ............ Accumuhted depreciation - Office equipment ......... Computer equipment .......... Accumulated depreciation- Computer equipment ..... $ 80,260 5,800 0 775 1,800 875 10,000 1,200 875 10,000 $14,272 625 (1,250) 25,000 (625) 25,000 Computer services revenue .... Net sales ................. Total revenue ........... Cost of goods sold ............ Depreciation expense- Office equipment .......... Depreciation expense- Computer equipment ... Wages expense ......... Insurance expense ......... Rent expense ................... Computer supplies expense ....... Advertising expense .............. Mileage expense .............. . Repairs expense-Computer ... Total expenses .......... Net income ....... (2,500) $147,621 (1,250) $122,635 Total assets ... 1,250 3,900 600 2,625 2,075 800 512 1,200 Liabilities and Equity Accounts payable ......... Wages payable ............ Unearned computer service revenue ........ Common stock ........ Retained earnings ........... Total liabilities and equity ...... .... $ 0 1,050 0 120,000 26,571 $147,621 $ 2,100 600 2,500 110,000 7,435 $122,635 27,859 $24,336 Required Prepare a statement of cash flows for Success Systems using the indirect method for the three months ended March 31, 2008. Recall that the owner Adriana Lopez contributed $10,000 to the business in exchange for additional stock in the first quarter of 2008 and has received $5,200 in cash dividends.

Answer 1

Success Systems
Cash Flow Statement
For the three month Period
Cash flows from operating activities:
Net Income	$24,336
Adjustments to reconcile net loss to net cash flow from operating activities:
Depreciation expense	$1,875
Changes in current operating assets and liabilities:
Increase in accounts receivable	-$18,600
Increase in merchandise inventory	-$680
Increase in computer supplies	-$1,175
Decrease in prepaid insurance	$600
Decrease in accounts payable	-$2,100
Increase in wages payable	$450
Decrease in unearned computer service revenue	-$2,500
Net Cash provided by operating activities:		$2,206
Cash Flow from Investing Activities
Cash Flow from Financing Activities
Proceeds from Common Stock	$10,000
Dividends Paid	-$5,200
Net Cash provided by financing activities:		$4,800
Net increase/decrease in cash held		$7,006
Cash at the beginning of the year		$80,260
Cash at the end of the year		$87,266