Adria Lopez, owner of Success Systems, decides to prepare a statement
Question # 00300840
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Updated on: 06/02/2016 12:31 AM Due on: 07/02/2016
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.)
SUCCESS SYSTEMS
Income Statement
For Three Months Ended March 31, 2014
Computer services revenue $25,160
Net sales 18,693
Total revenue 43,853
Cost of goods sold$14,052
Depreciation expense—Office equipment 400
Depreciation expense—Computer equipment 1,250
Wages expense 3,250
Insurance expense 555
Rent expense 2,475
Computer supplies expense 1,305
Advertising expense 600
Mileage expense 320
Repairs expense—Computer 960
Total expenses 25,167
Net Income $18,686
SUCCESS SYSTEMS
Comparative Balance Sheets
December 31, 2013, and March 31, 2014
2014 2013
Assets
Cash$77,845 $58,160
Accounts receivable 22,720 5,668
Merchandise Inventory 704 0
Computer supplies 2,005 580
Prepaid Insurance 1,110 1,665
Prepaid rent 825 825
Office equipment 8,000 8,000
Accumulated depreciation—Office equipment (800) (400)
Computer equipment 20,000 20,000
Accumulated depreciation—Computer equipment (2,500) (1,250)
Total assets $ 129,909 $ 93,248
Liabilities and Equity
Accounts payable $ 0 $ 1,100
Wages payable 875 500
Unearned computer service revenue 0 1,500
Common stock 108,000 83,000
Retained earnings 21,034 7,148
Total liabilities and equity $ 129,909 $ 93,248
Required:
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 $25,000 to the business in exchange for additional stock in the first quarter of 2014 and has received $4,800 in cash dividends. (Amounts to be deducted should be indicated with a minus sign.)
SUCCESS SYSTEMS
Income Statement
For Three Months Ended March 31, 2014
Computer services revenue $25,160
Net sales 18,693
Total revenue 43,853
Cost of goods sold$14,052
Depreciation expense—Office equipment 400
Depreciation expense—Computer equipment 1,250
Wages expense 3,250
Insurance expense 555
Rent expense 2,475
Computer supplies expense 1,305
Advertising expense 600
Mileage expense 320
Repairs expense—Computer 960
Total expenses 25,167
Net Income $18,686
SUCCESS SYSTEMS
Comparative Balance Sheets
December 31, 2013, and March 31, 2014
2014 2013
Assets
Cash$77,845 $58,160
Accounts receivable 22,720 5,668
Merchandise Inventory 704 0
Computer supplies 2,005 580
Prepaid Insurance 1,110 1,665
Prepaid rent 825 825
Office equipment 8,000 8,000
Accumulated depreciation—Office equipment (800) (400)
Computer equipment 20,000 20,000
Accumulated depreciation—Computer equipment (2,500) (1,250)
Total assets $ 129,909 $ 93,248
Liabilities and Equity
Accounts payable $ 0 $ 1,100
Wages payable 875 500
Unearned computer service revenue 0 1,500
Common stock 108,000 83,000
Retained earnings 21,034 7,148
Total liabilities and equity $ 129,909 $ 93,248
Required:
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 $25,000 to the business in exchange for additional stock in the first quarter of 2014 and has received $4,800 in cash dividends. (Amounts to be deducted should be indicated with a minus sign.)
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Rating:
/5
Solution: Adria Lopez, owner of Success Systems, decides to prepare a statement