Natalie has prepared the balance sheet and income statement of Cookie and Coffe 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. The income statement and balance sheet appear below. Recall that the company started operations on November 1,2017, socall of the opening balances are zero.

Additional information:

1. Recall from Chapter 15 that the company bought kitchen equipment for 17000 on November 1,2017, and signed a 12000 notes payable to help pay for it. The terms provide for semianual fixed principial payments of 2000 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 purchased from the lawyer for 500.

Prepare statement cash flows using :

1. Direct method

2. Indirect method

COOKIE & COFFEE CREATIONS INC. Income Statement Year Ended October 31, 2018 Sales $462,500 Cost of goods sold 231,250 Gross profit 231,250 Operating expenses Salaries and wages expense $92,500 Depreciation expense 9,850 138,337 Other operating expenses 35,987 92,913 Income from operations Other expenses 413 Interest expense 92,500 Income before income tax 18,500 Income tax expense $74,000 Net income COOKIE&COFFEE CREATIONS INC Balance Sheet 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 Accumulated depreciation-equipment 99,700 (9,850) 89,850 $149,516 Total assets Liabilities and Stockholders' Equity Current Liabilities $5,848 Accounts payable Total assets $149,516 Liabilities and Stockholders' Equity Current Liabilities Accounts payable $5,848 Income tax payable Dividends payable 18,500 700 2.250 Salaries and wages payable Interest payable Note payable-current portion Long-term Liabilities 188 $31,486 4000 6,000 Note payable-long-term portion Total liabilities 37,486 Stockholders Equity Paid-in capital Preferred stock, 2,800 shares issued and outstanding Common stock, 25,930 shares issued, 25,180 outstanding $14,000 25,930 39.930 72,600 Retained earnings 112,530 Total paid-in capital and retained earnings Less: Treasury stock-common (750 shares), at cost Total stockholders' equity (500) 112,030 $149,516 Total liabilities and stockholders' equity