Santana Rey, owner of Business Solutions, decides to prepare a statement of cash
ID: 2499365 • Letter: S
Question
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.)
Prepare a statement of cash flows for Business Solutions using the indirect method for the three months ended March 31, 2016. Recall that the owner Santana Rey contributed $29,000 to the business in exchange for additional stock in the first quarter of 2016 and has received $4,500 in cash dividends. (Amounts to be deducted should be indicated with a minus sign.)
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.)
Explanation / Answer
Business Solutions (Values in $) Cash Flows per Indirect Method as on 31 March 2016 Net Cash Flows from Operating Activities Net Income per Profit and Loss Account 18033 Add : Depreciation on Equipment 1590 Cash Flows before Working Capital Changes 19623 Less : Increase in Accounts Receivable -18399 Less : Increase in Inventory -654 Less : Increase in Computer Supplies -1565 Less : Decrease in Prepaid Insurance 485 Less : Decrease in Accounts Payable -1170 Add : Increase in Wages Payable 365 Less : Decrease in Unearned Revenue -1600 -22538 Net Cash Outflows from Operating Activities -2915 Net Cash Flows from Financing Activities Share Capital Issued 29000 Dividends Paid -4500 Net Cash Inflows from Financing Activities 24500 Net Cash Flows during the quarter 21585 Opening Cash and Bank Balance 57512 Closing Cash and Bank Balance 79097
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