Acc225 Fundamental Accounting Principles: Serial Problem 16 (SP16) Santana Rey, owner of Business

Acc225 Fundamental Accounting Principles Serial Problem 16 (SP16) Santana Rey, owner of Business Solutions, decides to prepare a statement of cash flows for her business. (Although the serial problem allowed for various ownership changes in earlier chapters, we will prepare the statement of cash flows using the following financial data.) Business Solutions Income Statement For Three Months Ended March 31, 2012 Computer service revenue 25,307 Net sales 18,693 Total revenue 44,000 Cost of goods sold 14,052 Depreciation expense - Office equipment 400 Depreciation expense - Computer equipment 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, 2011 and March 31, 2012 2012 2011 Assets Cash 68,057 48,372 Accounts receivable 22,867 5,668 Merchandise inventory 704 - Computer supplies 2,005 580 Prepaid insurance 1,110 1,665 Prepaid rent 825 825 Office equipment 8,000 8,000 Accumulated depreciation - Office equipment (800) (400) Computer equipment 20,000 20,000 Accumulated depreciation - Computer equipment (2,500) (1,250) Total Assets $120,268 $83,460 Liabilities and Equity Accounts payable - 1,100 Wages payable 875 500 Unearned computer service revenue - 1,500 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, 2012. Recall that the owner Santana Rey contributed $25,000 to the business in exchange for additional stock in the first quarter of 2012 and has received $4,800 in cash dividends.
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