SERIAL PROBLEM: KATE'S CARDS (Note: This is a continuation of the Serial Problem: Kate's Cards from Chapter 1 through Chapter 1l.) Kate has just completed her first year running Kate's Cards. She has been preparing monthly income statements and balance sheets, so she knows that her company has been profitable and that there is cash in the bank. She has not, however, prepared a statement of cash flows. Kate provides you with the year-end income statement and balance sheet and asks that you prepare a statement of cash flows for Kate's Cards SP12 Additional information: 1. There were no disposals of equipment during the year. 2. Dividends in the amount of $1,300 were paid in cash during the 3. Prepaid expenses relate to operating expenses. year Required Prepare a statement of cash flows for Kate's Cards for the year ended August 31, 2019, using the indirect method. Hint: Since this was Kate's first year of operations, the beginning balance . sheet account balances were zero. Prepare a statement of cash flows for Kate's Cards for the year ended August 31, 2019, using the direct method. (Appendix 12A) b. KATE'S CARDS Income Statement Year Ended August 31, 2019 Sales revenue. Cost of goods sold $185,000 106,000 Gross profit. Operating expenses Wages Consulting. Insurance Utilities Rent Depreciation 79,000 18,000 11,850 1,200 2,400 14.400 3,250 Total operating expenses 51,100 Income from operations. Interest expense... 27,900 900 Income before income tax 27,000 5,400 Income tax expense Net income $ 21,600 KATE'S CARDS Balance Sheet As of August 31, 2019 Assets Current assets Cash.. $17,400 11,000 Accounts receivable. Inventory... Prepaid insurance. 16,000 1,000 45,400 Total current assets Equipment Accumulated depreciation 17,500 (3,250) $59,650 Total assets Liabilities Current liabilities Accounts payable- $ 6,200 1,250 1,900 Unearned revenue Other current liabilities 9,350 15,000 Total current liabilities Note payable 24,350 Total liabilities. Stockholders' equity Common stock Additional paid-in-capital Preferred stock.. Retained earnings 500 9,500 5,000 20,300 35,300 Total stockholders' equity $59,650 Total liabilities and stockholders' equity