Adria Lopez, owner of Success Systems, decides to prepare a statement of cash fl

Question

Adria Lopez, owner of Success Systems, 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 Success Systems using the indirect method for the three months ended March 31, 2014. Recall that the owner Adria Lopez contributed $33,000 to the business in exchange for additional stock in the first quarter of 2014 and has received $4,100 in cash dividends. (Amounts to be deducted should be indicated with a minus sign.)

Adria Lopez, owner of Success Systems, 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

Success Systems

Statement of Cash Flows

For the three months ended March 31, 2014

$ $ Cash Flows from Operating Activities Net Income 18,883 Adjustments to reconcile net income to net cash flows from operations Depreciation Expense : Office Equipment 380 Depreciation Expense : Computer Equipment 1,150 Increase in accounts receivable -18,899 Increase in inventory -674 Increase in computer supplies -1,455 Decrease in prepaid insurance 555 Decrease in accounts payable - 1,180 Increase in Wages Payable 385 Decrease in unearned computer service revenue -2,300 -22,038 Net cash used in operating activities -3,155 Cash Flows from Investing Activities 0 Cash Flows from Financing Activities Cash proceeds from issuance of common stock 33,000 Cash dividends paid - 4,100 Net cash flows from financing activities 28,900 Net increase in cash and cash equivalents 25,745 Beginning cash and cash equivalents 53,472 Ending cash and cash equivalents 79,217

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