Needing some help with indirect and direct income statements. Info provided is:
Having trouble with the treasury stock. Is this correct?v(Indirect Method)
For the Direct Method, I can't seem to get the calculations correct on the Operating expenses and it is causing problems all the way down the line.
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, 2023 for the years 2023 and 2022 and the income statement for the year ended October 31, 2023, are presented below. COOKIE & COFFEE CREATIONS INC. Balance Sheet October 31, Assets 2023 2022 Cash $29,074 $11,550 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 $122,821 $94,160 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 par-25,930 shares issued and outstanding 25,930 25,930 Additional paid-in capital-treasury stock 250 0 Retained earnings 26.802 16,800 Less: Treasury stock 0 (500) $122,821 $94,160 Total liabilities and stockholders' equity COOKIE & COFFEE CREATIONS INC. Income Statement Year Ended October 31, 2023 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 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, 2022. 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, 2023, to be paid on November 15, 2023. 5. Accounts payable relate only to merchandise creditors. 6. Prepaid expenses relate only to other operating expenses. Net Cash used by Investing Activities -18500 Cash Flows from Financing Activities Payment of Cash Dividends $ -27000 Principal Repayment of Notes Payable -2000 Issuance of Preferred Stock 1000 Reissuance of Treasury Stock 250 Net Cash used by Financing Activities -28250 Net Increase in Cash 16524 Cash, November 1 11550 Cash, October 31 $ 28024 Noncash Investing and Financing Activities Issuance of note payable to purchase equipment $ 12000 COOKIE & COFFEE CREATIONS INC. Statement of Cash Flows (Direct Method) For the Year Ended October 31, 2023 Cash Flows from Operating Activities Cash Receipts From Customers $ 485085 Cash Payments To Suppliers $ 224441 i For Operating Expenses 216945 For Income Tax 7200 i For Interest 225 i 448811 Net Cash Provided by Operating Activities 36274 Cash Flows from Investing Activities Sale of Equipment $ 500 Durcbaco Cimont .19000 Net Cash used by Investing Activities -18500 Cash Flows from Financing Activities Payment of Cash Dividends $ - 27000 Principal Repayment of Notes Payable -2000 Issuance of Preferred Stock 1000 Reissuance of Treasury Stock -250 Net Cash used by Financing Activities -28250 Net Increase in Cash Cash, November 1 11550 Cash, October 31 $ Noncash Investing and Financing Activities Issuance of Note Payable to purchase Equipment $ 12000
