Serial Problem Business Solutions (Indirect) LO P1, P2, P3 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, 2016 Computer services revenue Net sales $25,107 17,893 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 43,000 $14,552 310 1,190 2,950 535 2,275 1,215 580 280 890 Total expenses 24,777 Net income $18,223 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 $ 79,847 57,432 5,568 23,567 624 2,065 1,090 785 490 1,655 785 Total current assets Office equipment Accumulated depreciation-Office equipment Computer equipment Accumulated depreciation-Computer equipment 107,978 7,900 (620) 19,600 65,930 7,900 (310) 19,600 (2,380)(1,190) Total assets $132,478 $91,930 Liabilities and Equity Accounts payable Wages payable Unearned computer service revenue 0 1,130 540 2,300 895 895 3,970 Total current liabilities Equity Common stock Retained earnings 110,000 21,583 80,000 7,960 Total liabilities and equity $132,478 $91,930 Required: 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 $30,000 to the business in exchange for additional stock in the first quarter of 2016 and has received $4,600 in cash dividends (Amounts to be deducted should be indicated with a minus sign.) BUSINESS SOLUTIONS Statement of Cash Flows (Indirect) For Quarter Ended March 31, 2016 Cash flows from operating activities Net income Adjustments to reconcile net income to net cash provided by operating activities Depreciation expense-Office equipment Depreciation expense-Computer equipment Increase in accounts receivable Increase in inventory Increase in computer supplies Decrease in prepaid insurance Decrease in accounts payable Increase in wages payable Decrease in unearned computer service revenue Net cash used by operating activities Cash flows from investing activities Net cash used in investing activities Cash flows from financing activities Cash received from stock issuance Cash paid for dividends Net cash provided by financing activities Net increase in cash Cash balance at December 31, 2015 Cash balance at March 31, 2016