Answered: (780) (390) Computer equipment 19,600…

Financial Accounting Intro Concepts Meth/Uses

14th Edition

ISBN:9781285595047

Author:Weil

Publisher:Weil

Chapter1: Introduction To Business Activities And Overview Of Financial Statements And The Reporting Process

Section: Chapter Questions

Problem 31E

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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, 2022 Computer services revenue $ 24,607 Net sales 17,993 Total revenue 42,600 Cost of goods sold $ 14,952 Depreciation expense—Office equipment 390 Depreciation expense—Computer equipment 1,160 Wages expense 2,950 Insurance expense 505 Rent expense 2,175 Computer supplies expense 1,255 Advertising expense 590 Mileage expense 250 Repairs expense—Computer 880 Total expenses 25,107 Net income $ 17,493 BUSINESS SOLUTIONS Comparative Balance Sheets March 31, 2022 December 31, 2021 Assets Cash $ 83,087 $ 58,852 Accounts receivable 23,667 5,068 Inventory 694 0 Computer supplies 2,085 560 Prepaid insurance 1,080 1,625 Prepaid rent 765 765 Total current assets 111,378 66,870 Office equipment 7,300 7,300 Accumulated depreciation—Office equipment (780) (390) Computer equipment 19,600 19,600 Accumulated depreciation—Computer equipment (2,320) (1,160) Total assets $ 135,178 $ 92,220 Liabilities and Equity Accounts payable $ 0 $ 1,160 Wages payable 925 500 Unearned computer service revenue 0 1,700 Total current liabilities 925 3,360 Equity Common stock 113,000 81,000 Retained earnings 21,253 7,860 Total liabilities and equity $ 135,178 $ 92,220 Required: Prepare a statement of cash flows for Business Solutions using the indirect method for the three months ended March 31, 2022. Owner Santana Rey contributed $32,000 to the business in exchange for additional stock in the first quarter of 2022 and has received $4,100 in cash dividends. (Amounts to be deducted should be indicated with a minus sign.)

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