Question

S SERIAL PROBLEM. KATE'S CARDS This is a continuation of the Serial Problem: Kate's Cards from Chapter 7 through Chapter 1 k ate has just completed her first vear running Kate's Cards. She has been preparing monthly statements and balance sheets, so she knows that her company has been profitable and that cash in the bank. She has not, however, prepared a statement of cash flows, Kate provides y the year-end income statement and balance sheet and asks that you prepare a statement of cash for Kate's Cards Additional information: a monthly income le and that there is Kate provides you with 1. There were no disposals of equipment during the year. 2. Dividends in the amount of $1.300 were paid in cash during the year. 3. Prepaid expenses relate to operating expenses. Required a. 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, usin the direct method. (Appendix 12A)

Answer 1

Kate's Cards 21600 Statement of Cashflow - Indirect Method For the period ending 31.8.2019 Cashflow from Operating Activity Net Income Adjustments: Depreciation 3250 Increase in Accounts Receivable -11000 Increase in Inventory - 16000 Increase in Prepaid Insurance -1000 Increase in Accounts Payable 6200 Increase in Unearned Revenue 1250 Increase in Other Current liabilities 1900 Cash generated from Operating Activity Statement of Cashflow - Direct Method For the period ending 31.8.2019 Cashflow from Operating Activity Collection from Customers (185000+0-11000) Payments to Suppliers(106000+16000-6200) Operating Expenses paid(18000+ 11850+1200 + 2400+14400+1000 - 1900) Interest paid Income Taxes paid Cash generated from Operating Activity 175250 -115800 -46950 -900 -5400 6200 Cashflow from Investing Activity Equipment purchased Cash used for Investing Activity - 15400 6200 - 17500 -17500 Cashflow from Investing Activity Equipment purchased Cash used for Investing Activity -17500 -17500 Cashflow from Financing Activity Note Payable issued Common Stock issued Dividends paid Additional paid-in-capital. Preferred Stock Cash generated from Financing Activity Net Increase in Cash Beginning Cash Balance Ending Cash Balance 15000 500 -1300 9500 5000 Cashflow from Financing Activity Note Payable issued Common Stock issued Dividends paid Additional paid-in-capital. Preferred Stock Cash generated from Financing Activity Net Increase in Cash Beginning Cash Balance Ending Cash Balance 15000 500 -1300 9500 5000 28700 17400 17400 28700 17400 17400