Statement of Cash Flows The comparative balance sheet of Kit Kat Company for December 31, 2019 and 2018, is as follows: Kit Kat Company Comparative Balance Sheet December 31, 2019 and 2018 Assets 2019 2018 Cash $140,350 95,900 Accounts receivable (net) 95,300 102,300 Inventories 165,200 157,900 Prepaid expenses 6,240 5,860 Investment (long-term) 35,700 84,700 Land 75,000 90,000 Buildings 375,000 260,000 Accumulated depreciation - buildings (71,300) (58,300) Machinery and equipment 428,300 428,300 Accumulated depreciation - machinery and equipment (148,500) (138,000) Patents 58.000 65.000 Total Assets SW.59.290 SL093.660 Liabilities and Stockholders' Equity Accounts Payable (Merchandise Creditors) 43,500 46,700 Accrued expenses payable (operating expenses) 14,000 12,500 Income taxes payable 7,900 8,400 Dividends payable 14,000 10,000 Mortgage note payable, due in 10 years 40,000 0 Bonds payable 150,000 250,00 Common stock, S30 par 450,000 375,000 Excess of issue price over par common stock 66,250 41,250 Retained earnings 373.640 349,810 Total liabilities and stockholder's equity 139.290 L093.660 The Income statement for Kit Kat Company follows: Kit Kat Company Income Statement December 31, 2019 Sales $1,100,000 710,000 390,00 23,500 7,000 Cost of Merchandise sold Gross Profit Operating expenses: Depreciation expense Patent amortization Other operating expenses Total Operating expenses Income from operations Other revenue and expense Gain on sale of investments I 196,000 226,500 163,500 11,000 (26,000) Interest expense Income before income tax (15,000) 148,500 50.000 98.500 Income tax expense Net Income An examination of the accounting records revealed the following additional information applicable to 2019: a) Land costing $15,000 was sold for $15,000 b) A mortgage note was issued for $40,000 c) A building costing $115,000 was constructed d) 2,500 shares of common stock were issued at $40 in exchange for the bonds payable e) Cash dividends declared were $74,670 Prepare a statement of cash flows, using the direct method of reporting cash flows from operating activities. For purposes of the direct method, the adjustment to arrive at cash payments for operating expenses includes changes in prepaid expenses. KaKa Corypang Statement of Cash Flows -- Direct Method For the year ended December 31, 2019 Cash flows from operating activities: Net cash flow from operating activities: Cash flows from used for) investing activities: Net cash flow used for investing activities Cash flows from (used for) financing activities: Net cash flow used for financing activities