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, 2018
Computer services revenue				$	24,907
Net sales					18,593
Total revenue					43,500
Cost of goods sold	$	14,352
Depreciation expense—Office equipment		390
Depreciation expense—Computer equipment		1,190
Wages expense		2,650
Insurance expense		515
Rent expense		1,675
Computer supplies expense		1,285
Advertising expense		550
Mileage expense		240
Repairs expense—Computer		890
Total expenses					23,737
Net income				$	19,763

BUSINESS SOLUTIONS
Comparative Balance Sheets
December 31, 2017, and March 31, 2018
	Mar. 31, 2018				Dec. 31, 2017
Assets
Cash	$	76,767			$	56,402
Accounts receivable		24,067				4,968
Inventory		644				0
Computer supplies		2,035				560
Prepaid insurance		1,050				1,585
Prepaid rent		735				735
Total current assets		105,298				64,250
Office equipment		7,300				7,300
Accumulated depreciation—Office equipment		(780	)			(390	)
Computer equipment		19,100				19,100
Accumulated depreciation—Computer equipment		(2,380	)			(1,190	)
Total assets	$	128,538			$	89,070
Liabilities and Equity
Accounts payable	$	0			$	1,180
Wages payable		915				530
Unearned computer service revenue		0				1,900
Total current liabilities		915				3,610
Equity
Common stock		105,000				78,000
Retained earnings		22,623				7,460
Total liabilities and equity	$	128,538			$	89,070

  
Required:
Prepare a statement of cash flows for Business Solutions using the indirect method for the three months ended March 31, 2018. Owner Santana Rey contributed $27,000 to the business in exchange for additional stock in the first quarter of 2018 and has received $4,600 in cash dividends. (Amounts to be deducted should be indicated with a minus sign.)
  

Answer 1

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