Continuing Cookie Chronicle (Note: This is a continuation of the Cookie Chronicle from Chapters 1 through 11.) CCC12 Natalie has prepared the balance sheet and income statement of Cookie & Coffee Creations Inc. and would like you to prepare the cash flow statement. The comparative balance sheet of Cookie & Coffee Creations Inc. at October 31, 2018 for the years 2018 and 2017 and the income statement for the year ended October 31, 2018, are presented below. Additional information: 1. Equipment (cost $4,500 and book value $3,000) was disposed of at the beginning of the year for $500 cash and replaced with new equipment purchased for $4,000 cash. 2. Additional equipment was bought for $14,000 on November 1, 2017. A $12,000 note payable was signed. The terms provide for equal semi-annual installment payments of $2,000 on May 1 and November 1 of each year, plus interest of 5% on the outstanding principal balance. 3. Other equipment was bought for $13,000 cash. 4. Dividends were declared on the preferred and common stock on October 15, 2018, to be paid on November 15, 2018. 5. Accounts payable relate only to merchandise creditors. 6. Prepaid expenses relate only to other operating expenses. Instructions (a) Prepare a statement of cash flows for Cookie & Coffee Creations Inc. for the year ended October 31, 2018, using the indirect method. COOKIE & COFFEE CREATIONS INC. Balance Sheet October 31, Assets 2018 2017 Cash $ 22,324 $5,550 Accounts receivable 3,250 2,710 Inventory 7,897 7,450 Prepaid expenses 5,800 6,050 Equipment 102,000 75,500 Accumulated depreciation equipment (25,200) (9,100) Total assets $116,071 $88,160 COOKIE & COFFEE CREATIONS INC. Balance Sheet October 31, Liabilities and Stockholders Equity 2018 2017 Accounts payable $ 1,150 $ 2,450 Income taxes payable 9,251 7,200 Dividends payable 27,000 27,000 Salaries and wages payable 7,250 1,280 Interest payable 188 0 Note payable 10,000 0 Preferred stock, no par, $6 cumulative, 3,000 and 2,800 shares issued, respectively 15,000 14,000 Common stock, $1 par25,180 shares issued and outstanding 25,180 25,180 Additional paid-in capitaltreasury stock 250 250 Retained earnings 20,802 10,800 Total liabilities and stockholders equity $116,071 $88,160 COOKIE & COFFEE CREATIONS INC. Income Statement Year Ended October 31, 2018 Sales $485,625 Cost of goods sold 222,694 Gross profit 262,931 Operating expenses Salaries and wages expense $147,979 Depreciation expense 17,600 Other operating expenses 48,186 213,765 Income from operations 49,166 Other expenses Interest expense $ 413 Loss on disposal of plant assets 2,500 2,913 Income before income tax 46,253 Income tax expense 9,251 Net income $ 37,002