Continuing Cookie Chronicle CCC12 Natalie has prepared the balance sheet and income statement of Cookie & Coffee Creations
Question # 00254389
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Updated on: 04/18/2016 08:45 AM Due on: 05/18/2016
Continuing Cookie Chronicle
(Note: This is a continuation of the Cookie Chronicle from Chapters 1 through 11.)
CCC12 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, 2018 for the years 2018 and 2017 and the income statement for the
year ended October 31, 2018, are presented below.
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, 2017. 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, 2018, to be paid on
November 15, 2018.
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, 2018, using the indirect method.
*(b) Prepare a statement of cash flows for Cookie & Coffee Creations Inc. for the year ended October
31, 2018, using the direct method.
COOKIE & COFFEE CREATIONS INC.
Balance Sheet
October 31,
Assets
Cash
2018
2017
$ 22,324
$5,550
Accounts receivable
3,250
2,710
Inventory
7,897
7,450
Prepaid expenses
5,800
6,050
102,000
75,500
(25,200)
(9,100)
$116,071
$88,160
Equipment
Accumulated depreciation—
equipment
Total assets
COOKIE & COFFEE CREATIONS INC.
Balance Sheet
October 31,
Liabilities and Stockholders’
Equity
2018
Accounts payable
$ 1,150
$ 2,450
9,251
7,200
27,000
27,000
7,250
1,280
188
0
10,000
0
15,000
14,000
25,180
25,180
250
250
20,802
10,800
$116,071
$88,160
Income taxes payable
Dividends payable
Salaries and wages payable
Interest payable
Note payable
2017
Preferred stock, no par, $6 cumulative,
3,000 and 2,800 shares issued,
respectively
Common stock, $1 par—25,180 shares
issued and outstanding
Additional paid-in capital—treasury stock
Retained earnings
Total liabilities and stockholders’ equity
COOKIE & COFFEE CREATIONS INC.
Income Statement
Year Ended October 31, 2018
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
Income before income tax
Income tax expense
Net income
2,500
2,913
46,253
9,251
$ 37,002
(Note: This is a continuation of the Cookie Chronicle from Chapters 1 through 11.)
CCC12 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, 2018 for the years 2018 and 2017 and the income statement for the
year ended October 31, 2018, are presented below.
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, 2017. 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, 2018, to be paid on
November 15, 2018.
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, 2018, using the indirect method.
*(b) Prepare a statement of cash flows for Cookie & Coffee Creations Inc. for the year ended October
31, 2018, using the direct method.
COOKIE & COFFEE CREATIONS INC.
Balance Sheet
October 31,
Assets
Cash
2018
2017
$ 22,324
$5,550
Accounts receivable
3,250
2,710
Inventory
7,897
7,450
Prepaid expenses
5,800
6,050
102,000
75,500
(25,200)
(9,100)
$116,071
$88,160
Equipment
Accumulated depreciation—
equipment
Total assets
COOKIE & COFFEE CREATIONS INC.
Balance Sheet
October 31,
Liabilities and Stockholders’
Equity
2018
Accounts payable
$ 1,150
$ 2,450
9,251
7,200
27,000
27,000
7,250
1,280
188
0
10,000
0
15,000
14,000
25,180
25,180
250
250
20,802
10,800
$116,071
$88,160
Income taxes payable
Dividends payable
Salaries and wages payable
Interest payable
Note payable
2017
Preferred stock, no par, $6 cumulative,
3,000 and 2,800 shares issued,
respectively
Common stock, $1 par—25,180 shares
issued and outstanding
Additional paid-in capital—treasury stock
Retained earnings
Total liabilities and stockholders’ equity
COOKIE & COFFEE CREATIONS INC.
Income Statement
Year Ended October 31, 2018
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
Income before income tax
Income tax expense
Net income
2,500
2,913
46,253
9,251
$ 37,002
-
Rating:
/5
Solution: Continuing Cookie Chronicle CCC12 Natalie has prepared the balance sheet and income statement of Cookie & Coffee Creations