Kate has just completed her first year running Kate's Cards. She has been preparing monthly income statements and balance sheets, so she knows that her company has been profitable and that there is cash in the bank. She has not, however, prepared a statement of cash flows. Kate provides you with the year-end income statement and balance sheet and asks that you prepare a statement of cash flows for Kate's Cards. Additional information: 

1. There were no disposals of equipment during the year. 

2. Dividends in the amount of \($1,300\) were paid in cash during the year. 

3. Prepaid expenses relate to operating expenses. 

Required

a. Prepare a statement of cash flows for Kate's Cards for the year ended August 31, 2019, using the indirect method. Hint: Since this was Kate's first year of operations, the beginning balance sheet account balances were zero.

b. Prepare a statement of cash flows for Kate’s Cards for the year ended August 31, 2019, using the direct method. 

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Sales revenue. Cost of goods sold Gross profit.... Operating expenses Wages Consulting. KATE'S CARDS Income Statement Year Ended August 31, 2019 $185,000 106,000 79,000 Insurance Utilities Rent Depreciation Total operating expenses. Income from operations. Interest expense.. Income before income tax Income tax expense. Net income. 18,000 11,850 1,200 2,400 14,400 3,250 51,100 27,900 900 27,000 5,400 $ 21,600