Acc280 Financial Accounting: Continuing Cookie Chronicle 12 (CCC12) - Cash Flows ONLY

Acc280 Financial Accounting
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 2013
Cash 22,324 5,550
Accounts receivable 3,250 2,710
Inventory 7,897 7,450
Prepaid expenses 5,800 6,050
Furniture and fixtures 18,000 5,000
Accumulated depreciation—furniture and fixtures (2,000) (1,000)
Computer equipment 4,000 4,500
Accumulated depreciation—computer equipment (600) (1,500)
Kitchen equipment 80,000 66,000
Accumulated depreciation—kitchen equipment (22,600) (6,600)
Total Assets $116,071 $88,160

Liabilities and Stockholders’ Equity
Accounts payable 1,150 2,450
Income taxes payable 9,251 7,200
Dividends payable 27,000 27,000
Salaries payable 7,250 1,280
Interest payable 188 -
Note payable 10,000 -
Preferred stock, no par, $6 cumulative, 3,000 and 2,800 shares issued, respectively 15,000 14,000
Common stock, $1 par—24,180 shares, issued and outstanding 25,180 25,180
Additional paid-in capital—Treasury stock 250 250
Retained earnings 20,802 10,800
Total Liabilities and Stockholders' Equity $116,071 $88,160

COOKIE & COFFEE CREATIONS INC.
Income Statement
Year Ended October 31, 2014

Sales 485,625
Cost of goods sold 222,694
Gross profit 262,931
Operating expenses
Salaries and wages expense 147,979
Depreciation expense 17,600
Other operating expenses 48,186 213,765
Income from operations 49,166
Other expenses
Interest expense 413
Loss on sale of computer equipment 2,500 2,913
Income before income tax 46,253
Income tax expense 9,251
Net 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.
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