Acc280 Financial Accounting: Continuing Cookie Chronicle 12 (CCC12)

Continuing Cookie Chronicle 12 (CCC12)(Note: This is a continuation of the Cookie Chronicle from Chapters 1 through 11.)Natalie has prepared the balance sheet and income statement of Cookie & Coffee Creations Inc. and would like you to prepare the cash flow statement. The comparative balance sheet of Cookie & Coffee Creations Inc. at October 31, 2014 for the years 2014 and 2013 and the income statement for the year ended October 31, 2014, are presented on the next page.COOKIE & COFFEE CREATIONS INC. Balance Sheet October 31, 2014 Assets 2014 2013Cash 22,324 5,550Accounts receivable 3,250 2,710Inventory 7,897 7,450Prepaid expenses 5,800 6,050Furniture and fixtures 18,000 5,000Accumulated depreciation—furniture and fixtures (2,000) (1,000)Computer equipment 4,000 4,500Accumulated depreciation—computer equipment (600) (1,500)Kitchen equipment 80,000 66,000Accumulated depreciation—kitchen equipment (22,600) (6,600)Total Assets $116,071 $88,160 Liabilities and Stockholders’ Equity Accounts payable 1,150 2,450Income taxes payable 9,251 7,200Dividends payable 27,000 27,000Salaries payable 7,250 1,280Interest payable 188 – Note payable 10,000 – Preferred stock, no par, $6 cumulative, 3,000 and 2,800 shares issued, respectively 15,000 14,000Common stock, $1 par—24,180 shares, issued and outstanding 25,180 25,180Additional paid-in capital—Treasury stock 250 250Retained earnings 20,802 10,800Total Liabilities and Stockholders’ Equity $116,071 $88,160 COOKIE & COFFEE CREATIONS INC. Income Statement Year Ended October 31, 2014 Sales 485,625Cost of goods sold 222,694Gross profit 262,931Operating expenses Salaries and wages expense 147,979 Depreciation expense 17,600 Other operating expenses 48,186 213,765Income from operations 49,166Other expenses Interest expense 413 Loss on sale of computer equipment 2,500 2,913Income before income tax 46,253Income tax expense 9,251Net income $37,002 Additional information: 1. All of the computer equipment was disposed of at the beginning of the year for $500 cash. New computer equipment was then bought for $4,000 cash. 2. Additional kitchen equipment was bought for $14,000 on November 1, 2013. A $12,000 note payable was signed. The terms provide for equal semi-annual installment payments of $2,000 on May 1 and November 1 of each year, plus interest of 5% on the outstanding principal balance.3. Additional furniture was bought for $13,000 cash.4. Dividends were declared on the preferred and common stock on October 15, 2014, to be paid on November 15, 2014.5. Accounts payable relate only to merchandise creditors. 6. Prepaid expenses relate only to other operating expenses.Instructions (a) Prepare a statement of cash flows for Cookie & Coffee Creations Inc. for the year ended October 31, 2014, using the indirect method. *(b) Prepare a statement of cash flows for Cookie & Coffee Creations Inc. for the year ended October 31, 2014, using the direct method.