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 $12,0000 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 $462,500 Sales Cost of goods sold 231,250 Gross profit 231,250 Operating expenses $92,500 Salaries and wages expense Depreciation expense 9,850 Other operating expenses 35,987 138,337 Income from operations 92,913 Other expenses Interest expense 413 Income before income tax 92,500 Income tax expense 18,500 $74,000 Net income

Answer 1

Cookie and Coffee Creations 74000 Statement of Cashflows For the period ending 31.10.2018 Cashflow from Operating Activities Net Income Adjustments: Depreciation Increase in Accounts Receivable Increase in Inventory Increase in prepaid rent Increase in accounts Payable Increase in Income tax Payable Increase in Dividends Payable Increase in salaries and wages Payable Increase in Interest Payable Increase in Note Payable Net Cash provided by Operating activity 9850 -3250 -17897 -6300 5848 18500 700 2250 188 4000 13889 87889 Cashflow from Investing Activity Purchase of Equipment Net Cash used by Investing activity -99700 -99700 Cashflow from Financing Activity Proceeds from common stock Proceeds from Preferred stock Note Payable Dividends paid (74000 - 72600) Net Cash from financing activity Net Increase in cash and cash equivalent Opening cash balance Closing cash balance 25430 14000 6000 -1400 44030 32219 32219