(Solved): Natalie has prepared the balance sheet and income statement of Cookie \& Coffee Creations Inc. for ...

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 cash flow statement. The income statement and balance sheet appear below. Recall that the company started operations on November 1,2020, so all of the opening balances are zero. Additional information: 1. The company bought kitchen equipment (a commercial oven) for $\$29,000$ on November 1, 2020, and signed a $\$12,000$ 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 11 that the company originally issued 25,930 common shares for $\$25,930$, of which 750 shares were repurchased from the lawyer for $\$500$. $\begin{array}{lr}\text{ Interest expense }& 413\\ \text{ Income before income tax }& 98,450\\ \text{ Income tax expense }& 19,690\\ \text{ Net income }& \$78,760\end{array}$ COOKIE \& COFFEE CREATIONS INC. Balance Sheet October 31, 2021 Assets Current assets Cash $\$86,219$ Accounts receivable Inventory Prepaid expenses Property, plant, and equipment Furniture and fixtures \begin{tabular}{rr} $\$12,500$ \\ \hline$(1,250)$ & 11,250 \\ 4,200 & \\ $(600)$ & 3,600 \end{tabular} Kitchen equipment 29,000 Accumulated depreciation-kitchen equipment Total assets $\frac{(2,050)}{26,950}?\frac{41,800}{\$155,466}$ Liabilities and Stockholders' Equity Current liabilities Accounts payable Income tax payable Dividends payable Salaries and wages payable Interest payable Note payable-current portion Long-term liabilities Note payable-long-term portion Total liabilities Stockholders' equity Paid-in capital Preferred stock, 2,800 shares issued and outstanding $\$14,000$ Common stock, 25,930 shares issued, 25,180 shares outstanding $25,93039,930$ Retained earnings 77,360 3. Recall from Chapter 11 that the company declared a semiannual dividend to the preferred stockholders on April 30 , and the dividend was paid on June 1. The second semiannual dividend was declared to the preferred stockholders on October 31 , to be paid on December 1. 4. Prepaid expenses relate only to operating expenses. (a) Prepare a statement of cash flows for Cookie $\&$ C Coffee Creations Inc. for the year ended October 31, 2021, using the indirect method. (Show amounts that decrease cash flow with either a-sign e.g. $?15,000$ or in parenthesis e.g. (15,000). If answer is 0 , please enter 0 . Do not leave any fields blank.) COOKIE $\&$ COFFEE CREATIONS INC. Cash Flow Statement $\$$ Adjustments to reconcile net income to $\$$ Save for Later Attempts: 0 of 3 used Submit Answer