Natalie 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 cash flow statement. The income statement and balance sheet appear below. Recall that the company started operations on November 1, 2020, so all of the opening balances are zero. Additional information: 1. The company bought kitchen equipment (a commercial oven) for $29,000 on November 1, 2020, 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. Recall from Chapter 11 that the company originally issued 25,930 common shares for $25,930, of which 750 shares were repurchased from the lawyer for $500. 2. COOKIE & COFFEE CREATIONS INC. Income Statement Year Ended October 31, 2021 Sales revenue $462,500 231,250 Cost of goods sold Gross profit Operating expenses 231,250 Salaries and wages expense $92,500 Depreciation expense 3,900 Other operating expenses 35,987 132,387 Income from operations 98,863 Other expenses Interest expense 413 Income before income tax 98,450 Income tax expense 19,690 Net income $78,760 COOKIE & COFFEE CREATIONS INC. Balance Sheet October 31, 2021 Assets Current assets Cash $86,219 Accounts receivable 3,250 Inventory 17,897 Prepaid expenses 6,300 $113,666 Property, plant, and equipment Furniture and fixtures $12,500 Accumulated depreciation-furniture and fixtures (1,250) 11,250 Computer equipment 4,200 Accumulated depreciation-computer equipment (600) 3,600 Kitchen equipment 29,000 Accumulated depreciation-kitchen equipment (2,050) 26,950 41.800 Total assets $155,466 Liabilities and Stockholders' Equity Current liabilities Accounts payable $5,848 Income tax payable 19,690 Dividends payable 700 Salaries and wages payable 2,250 Interest payable 188 Note payable-current portion 4,000 $32,676 Long-term liabilities Note payable-long-term portion 6,000 Total liabilities 38,676 Stockholders' equity Paid-in capital Preferred stock, 2,800 shares issued and outstanding $14,000 Common stock, 25,930 shares issued, 25,180 shares outstanding 25,930 39,930 Retained earnings 77,360 Total paid-in capital and retained earnings 117,290 Less: Treasury stock (750 common shares) 500 Total stockholders' equity 116,790 Total liabilities and stockholders' equity $155,466 3. Recall from Chapter 11 that the company declared a semiannual dividend to the preferred stockholders on April 30, and the dividend was paid on June 1. The second semiannual dividend was declared to the preferred stockholders on October 31, to be paid on December 1. 4. Prepaid expenses relate only to operating expenses. COOKIE & COFFEE CREATIONS INC. Cash Flow Statement Year Ended October 31, 2021 v Cash Flows from Operating Activities Net Income $ 78760 Adjustments to reconcile net income to Net Cash Provided by Operating Activities Depreciation Expense Increase in Interest Payable Increase in Accounts Receivable Increase in Inventory Increase in Prepaid Expenses Increase in Accounts Payable Increase in Income Taxes Payable Increase in Salaries and Wages Payable Net Cash Provided by Operating Activities V Cash Flows from Investing Activities buoni di bllokid Purchase of Furniture Purchase of Computer Equipment Purchase of Kitchen Equipment Net Cash used by Investing Activities V Cash Flows from Financing Activities Issuance of Common Stock V Issuance of Preferred Stock Issuance of Note Payable to purchase Kitchen Equipment Payment of Dividends V Principal Repayment of Notes Payable Net Cash used by Financing Activities Net Increase in Cash V Cash, November 1, 2020 Cash, October 31, 2021 $ $ Decrease in Accounts Payable Decrease in Accounts Receivable Decrease in Income Taxes Payable Decrease in Interest Payable Decrease in Inventory Decrease in Prepaid Expenses Decrease in Salaries and Wages Payable Depreciation Expense Gain on Disposal of Plant Assets Increase in Accounts Payable Increase in Accounts Receivable Increase in Income Taxes Payable Increase in Interest Payable Increase in Inventory Increase in Prepaid Expenses Increase in Salaries and Wages Payable Issuance of Note Payable to purchase Kitchen Equipment Issuance of Preferred Stock Issuance of Common Stock Issuance of Note Payable to purchase Kitchen Equipment Issuance of Preferred Stock Issuance of Common Stock Loss on Disposal of Plant Assets Net Income Payment of Dividends Principal Repayment of Notes Payable Purchase of Computer Equipment Purchase of Furniture Purchase of Kitchen Equipment Repurchase of Stock Cash Flows from Financing Activities Cash Flows from Investing Activities Cash Flows from Operating Activities Cash, November 1, 2020 Cash, October 31, 2021 Net Cash Provided by Financing Activities Net Cash Provided by Investing Activities Net Cash Provided by Operating Activities Net Cash used by Financing Activities Net Cash used by Investing Activities Net Cash used by Operating Activities Net Decrease in Cash Net Increase in Cash Noncash Investing and Financing Activities