Question
Natalie has prepared the balance sheet and income statement of Cookie & Coffee Creations Inc. and would like you to prepare the cash flow statement.
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.
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 |
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. |
Prepare a statement of cash flows for Cookie & Coffee Creations Inc. for the year ended October 31, 2018, using the indirect method.
Prepare a statement of cash flows for Cookie & Coffee Creations Inc. for the year ended October 31, 2018, using the direct method. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started