Question

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, 2023 for the years 2023 and 2022 and the income statement for the year ended October 31, 2023, are presented below.

COOKIE & COFFEE CREATIONS INC. Balance Sheet October 31,
Assets		2023			2022
Cash		$29,074			$11,550
Accounts receivable		3,250			2,710
Inventory		7,897			7,450
Prepaid expenses		5,800			6,050
Equipment		102,000			75,500
Accumulated depreciation— equipment		(25,200)			(9,100)
Total assets		$122,821			$94,160
Liabilities and Stockholders’ Equity		2018			2017
Accounts payable		$1,150			$2,450
Income taxes payable		9,251			7,200
Dividends payable		27,000			27,000
Salaries and wages payable		7,250			1,280
Interest payable		188			0
Note payable		10,000			0
Preferred stock, no par, $6 cumulative, 3,000 and 2,800 shares issued, respectively		15,000			14,000
Common stock, $1 par—25,930 shares issued and outstanding		25,930			25,930
Additional paid-in capital—treasury stock		250			0
Retained earnings		26,802			16,800
Less: Treasury stock		0			(500)
Total liabilities and stockholders’ equity		$122,821			$94,160

COOKIE & COFFEE CREATIONS INC. Income Statement Year Ended October 31, 2023
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 disposal of plant assets		2,500		2,913
Income before income tax				46,253
Income tax expense				9,251
Net income				$37,002

Additional information:

1.		Equipment (cost $4,500 and book value $3,000) was disposed of at the beginning of the year for $500 cash and replaced with new equipment purchased for $4,000 cash.
2.		Additional equipment was bought for $14,000 on November 1, 2022. 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.		Other equipment was bought for $13,000 cash.
4.		Dividends were declared on the preferred and common stock on October 15, 2023, to be paid on November 15, 2023.
5.		Accounts payable relate only to merchandise creditors.
6.		Prepaid expenses relate only to other operating expenses.

Prepare a statement of cash flows for Cookie & Coffee Creations Inc. for the year ended October 31, 2023, 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).)Partially correct answer iconYour answer is partially correct.

Prepare a statement of cash flows for Cookie & Coffee Creations Inc. for the year ended October 31, 2023, using the direct method. (Show amounts in the investing and financing sections that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)

				$Enter a dollar amount

Answer 1

Kindly complete in required formats as necessary since the same have not been provided with the question. For clarifications, write under the comments section.

COOKIE & COFFEE CREATIONS INC.
Statement of Cash Flows (Indirect Method)
For the Year Ended October 31, 2023
Cash Flows from Operating activities:
Net Income		37002
Adjustments to reconcile net income to
cash flows from operating activities
Depreciation expense	17600
Loss on disposal of plant assets	2500
Increase in Accounts receivable	-540
Increase in Inventory	-447
Decrease in Prepaid expenses	250
Decrease in Accounts payable	-1300
Increase in income taxes payable	2051
Increase in Salaries and wages payable	5970
Increase in interest payable	188
		26272
Net cash provided by operating activities		63274
Cash Flows from Investing activities:
Sale proceeds from equipment	500
Purchase of equipment ($4000 + $2000 + $13000)	-19000
Net cash used by investing activities		-18500
Cash Flows from Financing activities:
Repayment of note payable	-2000
Issuance of Preferred stock	1000
Sale of treasury stock	750
Cash dividend paid	-27000
Net cash used by financing activities		-27250
Net increase in cash		17524
Cash balance, October 31, 2022		11550
Cash balance, October 31, 2023		29074
Noncash Investing and Financing Activities:
Issuance of note payable for equipment purchase		12000

COOKIE & COFFEE CREATIONS INC.
Statement of Cash Flows (Direct Method)
For the Year Ended October 31, 2023
Cash Flows from Operating Activities
Cash Received from Customers:
Sales	485625
Less Increase in Accounts Receivable	-540	485085
Cash payments:
Cash Payment to Suppliers
Cost of goods sold	-222694
Add Increase in Inventory	-447
Add Decrease in Accounts payable	-1300	-224441
Cash Payment to Employees
Salaries and Wages	-147979
Less Increase in Salaries and wages payable	5970	-142009
Cash Payment for Other Operating Expenses
Other operating expenses	-48186
Less Decrease in Prepaid rent	250	-47936
Cash Payment for Interest Expenses
Interest expense	-413
Less Increase in Interest payable	188	-225
Income tax expense	-9251
Less Increase in income taxes payable	2051	-7200
Net cash provided by operating activities		63274
Cash Flows from Investing activities:
Sale proceeds from equipment	500
Purchase of equipment ($4000 + $2000 + $13000)	-19000
Net cash used by investing activities		-18500
Cash Flows from Financing activities:
Repayment of note payable	-2000
Issuance of Preferred stock	1000
Sale of treasury stock	750
Cash dividend paid	-27000
Net cash used by financing activities		-27250
Net increase in cash		17524
Cash balance, October 31, 2022		11550
Cash balance, October 31, 2023		29074
Noncash Investing and Financing Activities:
Issuance of note payable for equipment purchase		12000