Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Question 7 Natalie has prepared the balance sheet and income statement of Cookie & Coffee Creations Inc. for the first year of operations, but does

image text in transcribedimage text in transcribedimage text in transcribedimage text in transcribedimage text in transcribedimage text in transcribed

Question 7 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, 2018, 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, 2018, 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. 2. 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. COOKIE & COFFEE CREATIONS INC. Income Statement Year Ended October 31, 2019 Sales revenue $462,500 Cost of goods sold 231,250 Gross profit 231,250 Operating expenses 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, 2019 Assets Current assets Cash $86,219 3,250 17,897 6,300 $113,666 11,250 $12,500 (1,250) 4,200 (600) 29,000 (2,050) 3,600 26,950 41,800 $ 155,466 Accounts receivable Inventory Prepaid expenses Property, plant, and equipment Furniture and fixtures Accumulated depreciation-furniture and fixtures Computer equipment Accumulated depreciation-computer equipment Kitchen equipment Accumulated depreciation-kitchen equipment Total assets Liabilities and Stockholders' Equity Current liabilities Accounts payable Income tax payable Dividends payable Salaries and wages payable Interest payable Note payable-current portion Long-term liabilities Note payable-long-term portion Total liabilities Stockholders' equity Paid-in capital Preferred stock, 2,800 shares issued and outstanding Common stock, 25,930 shares issued, 25,180 shares outstanding Retained earnings Total paid-in capital and retained earnings Less: Treasury stock (750 common shares) Total stockholders' equity Total liabilities and stockholders' equity $5,848 19,690 700 2,250 188 4,000 $32,676 6,000 38,676 $14,000 25,930 39,930 77,360 117,290 500 116,790 $ 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. Prepare a statement of cash flows for Cookie & Coffee Creations Inc. for the year ended October 31, 2019, using the Indirect method. COOKIE & COFFEE CREATIONS INC. Cash Flow Statement Adjustments to reconcile net income to $ LINK TO TEXT LINK TO TEXT LINK TO TEXT LINK TO TEXT LINK TO TEX 1 Prepare a statement of cash flows for Cookie & Coffee Creations Inc. for the year ended October 31, 2019, using the direct method. COOKIE & COFFEE CREATIONS INC. Cash Flow Statement $ LINK TO TEXT LINK TO TEXT LINK TO TEXT LINK TO TEXT LINK TO TEXT

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Accounting Information For Decisions

Authors: Robert Ingram, Thomas L. Albright, Bruce A. Baldwin, John Hill

1st Edition

0538815388, 978-0538815383

More Books

Students also viewed these Accounting questions

Question

2. Use different groups for different subjects.

Answered: 1 week ago