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				$	25,007
Net sales					18,193
Total revenue					43,200
Cost of goods sold	$	14,652
Depreciation expense—Office equipment		350
Depreciation expense—Computer equipment		1,250
Wages expense		2,350
Insurance expense		475
Rent expense		2,375
Computer supplies expense		1,235
Advertising expense		560
Mileage expense		260
Repairs expense—Computer		940
Total expenses					24,447
Net income				$	18,753

 

BUSINESS SOLUTIONS
Comparative Balance Sheets
December 31, 2019, and March 31, 2020
	Mar. 31, 2020						Dec. 31, 2019
Assets
Cash		$	83,227					$	58,612
Accounts receivable			24,167						5,168
Inventory			644						0
Computer supplies			2,075						500
Prepaid insurance			1,090						1,645
Prepaid rent			745						745
Total current assets			111,948						66,670
Office equipment			7,800						7,800
Accumulated depreciation—Office equipment			(700	)					(350	)
Computer equipment			19,700						19,700
Accumulated depreciation—Computer equipment			(2,500	)					(1,250	)
Total assets		$	136,248					$	92,570
Liabilities and Equity
Accounts payable		$	0					$	1,120
Wages payable			935						590
Unearned computer service revenue			0						2,300
Total current liabilities			935						4,010
Equity
Common stock			113,000						81,000
Retained earnings			22,313						7,560
Total liabilities and equity		$	136,248					$	92,570

 
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 $32,000 to the business in exchange for additional stock in the first quarter of 2020 and has received $4,000 in cash dividends. (Amounts to be deducted should be indicated with a minus sign.)
 
    BUSINESS SOLUTIONS

 Statement of Cash Flows (Indirect)

For Quarter Ended March 31, 2020

Cash flows from  operating activities
Net income
Adjustments to  reconcile net income to net cash provided by operating activities
Increase in  accounts receivable
Increase in  inventory
Increase in  computer supplies
Decrease in  prepaid insurance
Decrease in  accounts payable
Increase in wages  payable
Decrease in  unearned computer service revenue
Depreciation  expense—Office equipment
Depreciation  expense—Computer equipment
Net cash used by  operating activities
Cash flows from  investing activities
Net cash used in  investing activities
Cash flows from  financing activities
Cash received from  stock issuance
Cash paid for  dividends
Net cash provided  by financing activities
Net increase in  cash
Cash balance at  December 31, 2019
Cash balance at  March 31, 2020