Question

Cookie Creations 17 (Part Level Submission) 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 statement of cash flows. The income statement and balance sheet appear below. Recall that the company started operations on November 1, 2017, so all of the opening balances are zero. The income statement and balance sheet appear below. Recall that the company started operations on November 1, 2017, so all of the opening balances are zero. Additional information: 1. Recall from Chapter 15 that the company bought kitchen equipment (a commercial oven) for $17,000 on November 1, 2017, 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 14 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, 2018 Sales $462,500 Cost of goods sold 231,250 Gross profit 231,250 Operating expenses Salaries and wages expense $92,500 Depreciation expense 9,850 Other operating expenses 35,987 138,337 Income from operations Other expenses Interest expense 413 Income before income tax 92,500 Income tax expense 18,500 Net income $74,000 92.913

Answer 1

Answer:

Cookie and Coffee Creations
Statement of Cashflows
For the period ending 31.10.2018
Cashflow from Operating Activities
Net Income		$74,000
Adjustments:
Depreciation	$9,850
Increase in Accounts Receivable	($3,250)
Increase in Inventory	($17,897)
Increase in prepaid rent	($6,300)
Increase in accounts Payable	$5,848
Increase in Income tax Payable	$18,500
Increase in Dividends Payable	$700
Increase in Salaries and wages payable	$2,250
Increase in Interest payable	$188
Increase in Note Payable	$4,000	$13,889
Net Cash provided by Operating activity		$87,889
Cashflow from Investing Activity
Purchase of Equipment	($99,700)
Net Cash used by Investing activity		($99,700)
Cashflow from Financing Activity
Proceeds from common stock	$25,430
Proceeds from preferred stock	$14,000
Note Payable	$6,000
Dividends paid (74000-72600)	($1400)
Net cash from financing activity		$44,030
Net Increase in cash and cash equivalent		$32,219
Opening cash balance		$0
Closing cash balance		$32,219