Natalie has prepared the balance sheet

    Natalie has prepared the balance sheet and income statement of Cookie & CoffeeCreations Inc. for the first year of operations, but does not understand how to prepare the cashflow statement.The income statement and balance sheet appear below. Recall that the companystarted operations on November 1, 2012, 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, 2012, and signed a $12,000 note payable to help pay for it.Theterms provide for semiannual fixed principal payments of $2,000 on May 1 and November 1of each year, plus interest of 5%. All other furniture, fixture, and equipment were purchasedduring 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, 2013Sales $462,500Cost of goods sold 231,250Gross profit 231,250Operating expensesSalaries and wages expense $92,500Depreciation expense 9,850Other operating expenses 35,987 138,337Income from operations 92,913Other expensesInterest expense 413Income before income tax 92,500Income tax expense 18,500Net income $ 74,000COOKIE & COFFEE CREATIONS INC.Balance SheetOctober 31, 2013AssetsCurrent assetsCash $32,219Accounts receivable 3,250Inventory 17,897Prepaid expenses 6,300 $ 59,666Property, plant, and equipmentFurniture and fixtures $12,500Accumulated depreciation—furniture and fixtures (1,250) 11,250Computer equipment 4,200Accumulated depreciation—computer equipment (600) 3,600Kitchen equipment 83,000Accumulated depreciation—kitchen equipment (8,300) 75,000 89,850Total assets $149,516Liabilities and Stockholders’ EquityCurrent liabilitiesAccounts payable $ 5,848Income tax payable 18,500Dividends payable 700Salaries payable 2,250Interest payable 188Note payable—current portion 4,000 $ 31,486Long-term liabilitiesNote payable—long-term portion 6,000Total liabilities 37,486Stockholders’ equityPaid-in capitalPreferred stock, 2,800 shares issued andoutstanding $ 14,000Common stock, 25,930 shares issued, 25,180outstanding 25,930 39,930Retained earnings 72,600Total paid-in capital and retained earnings 112,530Less: Treasury stock—common (750 shares), at cost (500)Total stockholders’ equity 112,030Total liabilities and stockholders’ equity $149,516Instructions(a) Prepare a statement of cash flows for Cookie & Coffee Creations Inc. for the year endedOctober 31, 2013, using the indirect method.(b) Prepare a statement of cash flows for Cookie & Coffee Creations Inc. for the year endedOctober 31, 2013, using the direct method.

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