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Kate has just completed her first year running Kate's Cards. She has been preparing monthly income statements and balance sheets, so she knows that her company has been profitable and that there in cash in the bank. She has not, however, prepared a statement of cash flows. Kate provides vou vish the year-end income statement and balance sheet and asks that you prepare a statement of cash flows for Kate's Cards. Additional information: 1. There were no disposals of equipment during the year. 2. Dividends in the amount of $1,300 were paid in cash during the year. 3. Prepaid expenses relate to operating expenses. Required a. Prepare a statement of cash flows for Kate's Cards for the year ended August 31, 2019, using the indirect method. Hint: Since this was Kate's first year of operations, the beginning balance sheet account balances were zero. b. Prepare a statement of cash flows for Kate's Cards for the year ended August 31, 2019, using the direct method. (Appendix 12A)

Kate has just completed her first year running Kate's Cards. She has been preparing monthly income statements and balance sheets, so she knows that her company has been profitable and that there in cash in the bank. She has not, however, prepared a statement of cash flows. Kate provides vou vish the year-end income statement and balance sheet and asks that you prepare a statement of cash flows for Kate's Cards. Additional information: 1. There were no disposals of equipment during the year. 2. Dividends in the amount of $1,300 were paid in cash during the year. 3. Prepaid expenses relate to operating expenses. Required a. Prepare a statement of cash flows for Kate's Cards for the year ended August 31, 2019, using the indirect method. Hint: Since this was Kate's first year of operations, the beginning balance sheet account balances were zero. b. Prepare a statement of cash flows for Kate's Cards for the year ended August 31, 2019, using the direct method. (Appendix 12A)

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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for wages and other operating expenses." Accounts payable relate to inventory purchases only. P12-9B. Statement of Cash Flows (Direct Method) Refer to the data given for the Geary Company in Prepare a statement of cash flows using the direct method. Use one cash outflow for "cash paid Required Compute the change in cash that occurred during 2019. а. LO4 Appendix 12A) Problem P12-4B. Required Compute the change in cash that occurred during 2019. b. а. for wages and other operating expenses." SERIAL PROBLEM: KATE'S CARDS (Note: This is a continuation of the Serial Problem: Kate's Cards from Chapter 1 through Chapter 11 Kate has just completed her first year running Kate's Cards. She has been preparing monthly income statements and balance sheets, so she knows that her company has been profitable and that there is cash in the bank. She has not, however, prepared a statement of cash flows. Kate provides you with the year-end income statement and balance sheet and asks that you prepare a statement of cash flowe for Kate's Cards. SP12. e's ards Additional information: 1. There were no disposals of equipment during the year. 2. Dividends in the amount of $1,300 were paid in cash during the year. 3. Prepaid expenses relate to operating expenses. Required Prepare a statement of cash flows for Kate's Cards for the year ended August 31, 2019, using the indirect method. Hint: Since this was Kate's first year of operations, the beginning balance а. sheet account balances were zero. b. Prepare a statement of cash flows for Kate's Cards for the year ended August 31, 2019, using the direct method. (Appendix 12A)
Transcribed Image Text:for wages and other operating expenses." Accounts payable relate to inventory purchases only. P12-9B. Statement of Cash Flows (Direct Method) Refer to the data given for the Geary Company in Prepare a statement of cash flows using the direct method. Use one cash outflow for "cash paid Required Compute the change in cash that occurred during 2019. а. LO4 Appendix 12A) Problem P12-4B. Required Compute the change in cash that occurred during 2019. b. а. for wages and other operating expenses." SERIAL PROBLEM: KATE'S CARDS (Note: This is a continuation of the Serial Problem: Kate's Cards from Chapter 1 through Chapter 11 Kate has just completed her first year running Kate's Cards. She has been preparing monthly income statements and balance sheets, so she knows that her company has been profitable and that there is cash in the bank. She has not, however, prepared a statement of cash flows. Kate provides you with the year-end income statement and balance sheet and asks that you prepare a statement of cash flowe for Kate's Cards. SP12. e's ards Additional information: 1. There were no disposals of equipment during the year. 2. Dividends in the amount of $1,300 were paid in cash during the year. 3. Prepaid expenses relate to operating expenses. Required Prepare a statement of cash flows for Kate's Cards for the year ended August 31, 2019, using the indirect method. Hint: Since this was Kate's first year of operations, the beginning balance а. sheet account balances were zero. b. Prepare a statement of cash flows for Kate's Cards for the year ended August 31, 2019, using the direct method. (Appendix 12A)
O Camb Chapter 12 Statement of Cash Flows KATE'S CARDS Income Statement Year Ended August 31, 2019 Sales revenue. Cost of goods sold $185,000 106,000 Gross profit. 79,000 Operating expenses Wages Consulting. Insurance Utilities 18,000 11,850 1,200 Rent 2,400 Depreciation. 14,400 3,250 Total operating expenses. 51,100 Income from operations Interest expense. 27,900 900 Income before income tax 27,000 5,400 Income tax expense Net income $ 21,600 KATE'S CARDS Balance Sheet As of August 31, 2019 Assets Current assets Cash.... Accounts receivable $17,400 11,000 16,000 Inventory. Prepaid insurance. 1,000 45,400 17,500 (3,250) Total current assets Equipment ..... Accumulated depreciation $59,650 Total assets Liabilities Current liabilities Accounts payable. Unearned revenue $ 6,200 1,250 1,900 Other current liabilities 9,350 15,000 Total current liabilities Note payable Total liabilities. 24,350 Stockholders' equity Common stock. 500 9,500 Additional paid-in-capital Preferred stock. Retained earnings 5,000 20,300 35,300 Total stockholders' equity. $59,650 Total liabilities and stockholders' equity
Transcribed Image Text:O Camb Chapter 12 Statement of Cash Flows KATE'S CARDS Income Statement Year Ended August 31, 2019 Sales revenue. Cost of goods sold $185,000 106,000 Gross profit. 79,000 Operating expenses Wages Consulting. Insurance Utilities 18,000 11,850 1,200 Rent 2,400 Depreciation. 14,400 3,250 Total operating expenses. 51,100 Income from operations Interest expense. 27,900 900 Income before income tax 27,000 5,400 Income tax expense Net income $ 21,600 KATE'S CARDS Balance Sheet As of August 31, 2019 Assets Current assets Cash.... Accounts receivable $17,400 11,000 16,000 Inventory. Prepaid insurance. 1,000 45,400 17,500 (3,250) Total current assets Equipment ..... Accumulated depreciation $59,650 Total assets Liabilities Current liabilities Accounts payable. Unearned revenue $ 6,200 1,250 1,900 Other current liabilities 9,350 15,000 Total current liabilities Note payable Total liabilities. 24,350 Stockholders' equity Common stock. 500 9,500 Additional paid-in-capital Preferred stock. Retained earnings 5,000 20,300 35,300 Total stockholders' equity. $59,650 Total liabilities and stockholders' equity
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