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.

3. Other equipment was bought for $13,000 cash.

4. A $10,000 three-year note payable was signed.

5. Paid $27,000 dividends.

Instructions

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, 2018 2017 Assets $22,324 $5,550 3,250 2,710 7,897 7,450 5,800 6,050 102,000 75,500 (25,200) (9,100) $116,071 $88,160 Cash Accounts receivable Inventory Prepaid expenses Equipment Accumulated depreciation equipment Total assets Liabilities and Stockholders' Equity Accounts payable Income taxes payable Dividends payable Salaries and wages payable Interest payable Note payable Common stock Retained earnings Total liabilities and stockholders' equity $1,150 $2,450 9,251 7,200 27,000 27,000 7,250 1,280 188 0 10,000 $0 40,430 39,430 20,802 10,800 $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