Santana Rey, owner of Business Solutions, decides to prepare a statement of cash

Question

Santana Rey, owner of Business Solutions, decides to prepare a statement of cash flow business. (Although the serial problem allowed for various ownership changes in earlie will prepare the statement of cash flows using the following financial data.) BUSINESS SOLUTIONS Income Statement For Three Months Ended March 31, 2016 Computer services revenue Net sales $24,607 18,593 43,200 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 $14,252 380 1,250 2,750 455 2,375 1,205 590 320 930 Total expenses 24,507 Net income $18,693 BUSINESS SOLUTIONS Comparative Balance Sheets December 31, 2015, and March 31, 2016 Mar. 31 2016 Dec. 31 2015 Assets Cash Accounts receivable Inventory Computer supplies Prepaid insurance Prepaid rent 74,847 54,372 4,868 23,667 684 2,075 1,030 775 500 1,595 775 Total current assets Office equipment Accumulated depreciation-Office equipment Computer equipment Accumulated depreciation-Computer equipment 103,078 7,300 (760) 19,700 (2,500) 62,110 7,300 (380) 19,700 1250)

Explanation / Answer

Business Solutions

Cash flow statement for the three months ended March 31, 2016: Indirect

$ $ Cash flows from operating activities 18,693 Net income Adjustments for non-cash and non-operating items Depreciation expense 1,630 Operating profit before working capital changes 20,323 Increase in accounts receivable (18,799) Increase in inventory (684) Increase in computer supplies (1,575) Decrease in prepaid expenses 565 Decrease in accounts payable (1,120) Increase in wages payable 465 Decrease in unearned revenue (1,600) (22,748) Net cash used in operating activities (2,425) Cash flows from investing activities Nil Cash flows from financing activities Issuance of common stock 27,000 Cash dividends paid (4,100) Net cash flows from financing activities 22,900 Net increase in cash 20,475 Cash, December 31, 2015 54,372 Cash, March 31,2016 74,847

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