Acc280 Financial Accounting: Continuing Cookie Chronicle 12 (CCC12) with Evaluation and Analysis

Acc280 Financial Accounting 
Continuing Cookie Chronicle 12 
(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. 

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. 

(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. 

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 

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 

A summary of major business developments affecting Cookie Creations' accounting books. 
An evaluation of Cookie Creations' statement of cash flows for the year, ending October 31, 2012 (indirect method). This requires that CCC12 be complete. You may work with your CLC team on completing the requirements for CCC12 in preparation for your presentation. Include in your evaluation the following key figures from the statement of cash flows: 
Net income 
Net cash provided by operating activities 
Net cash used by investing activities 
Net cash used by financing activities 
Net increase in cash 
Cash as of October 31 
An analysis of Cookie Creations overall financial health. You must include the calculations for at least three ratios.
Powered by