CC17Natalie has prepared the balance sheet and income statement of Cookie & Coffee Creations Inc. for the first year of operations, but does not understand how to prepare the statement of cash flows. The income statement and balance sheet appear below. Recall that the company started operations on November 1, 2017, so all of the opening balances are zero.

Additional information:

1. Recall from Chapter 15 that the company bought kitchen equipment (a commercial oven) for $17,000 on November 1, 2017, and signed a $12,000 note payable to help pay for it. The terms provide for semiannual fixed principal payments of $2,000 on May 1 and November 1 of each year, plus interest of 5%. All other furniture, fixture, and equipment were purchased during the year for cash.

2. Recall from Chapter 14 that the company originally issued 25,930 common shares for $25,930, of which 750 shares were repurchased from the lawyer for $500.

COOKIE & COFFEE CREATIONS INC. Income Statement Year Ended October 31, 2018
Sales revenue		$462,500
Cost of goods sold		231,250
Gross profit		231,250
Operating expenses
Salaries and wages expense	$92,500
Depreciation expense	9,850
Other operating expenses	35,987	138,337
Income from operations		92,913
Other expenses
Interest expense		413
Income before income tax		92,500
Income tax expense		18,500
Net income		$ 74,000

COOKIE & COFFEE CREATIONS INC.

Balance Sheet

October 31, 2018

Assets
Current assets
Cash		$32,219
Accounts receivable		3,250
Inventory		17,897
Prepaid rent		6,300	$ 59,666
Property, plant, and equipment
Equipment		$99,700
Accumulated depreciationequipment		(9,850)	89,850
Total assets			$149,516
Liabilities and Stockholders Equity
Current liabilities
Accounts payable		$ 5,848
Income taxes payable		18,500
Dividends payable		700
Salaries and wages payable		2,250
Interest payable		188
Notes payablecurrent portion		4,000	$31,486
Long-term liabilities
Notes payablelong-term portion			6,000
Total liabilities			37,486
Stockholders equity
Paid-in capital
Preferred stock, 2,800 shares issued and outstanding	$14,000
Common stock, 25,930 shares issued, 25,180 outstanding	25,930	39,930
Retained earnings		72,600
Total paid-in capital and retained earnings		112,530
Less: Treasury stockcommon (750 shares), at cost		500
Total stockholders equity			112,030
Total liabilities and stockholders equity			$149,516

Instructions

(a) Prepare a statement of cash flows for Cookie & Coffee Creations Inc. for the year ended October 31, 2018, using the indirect method.

(b) Prepare a statement of cash flows for Cookie & Coffee Creations Inc. for the year ended October 31, 2018, using the direct method.