ventory purchases only. Statement of Cash Flows (Direct Method) Refer to the data given for the Geary Company im Prepare a statenlell for wages and other operating expenses." Acc cash Pad Utities Rent .. Deprecia Total op b. P12-9B. LO4 (Appendix 12A) Income Interes Problem P12-4B. Required Compute the change in cash that occurred during 2019. b. Prepare a statement of cash flows using the direct method. Use one cash outflow for "cash p MBC Incom х a. Incor paid Net 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 the year-end income statement and balance sheet and asks that you prepare a statement of cash flows SP12. Kate's you with Cards for Kate's Cards. Additional information: 1. There were no disposals of equipment during the 2. Dividends in the amount of $1,300 were paid in cash during the 3. Prepaid expenses relate to operating expenses. year. year. 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 a. sheet account balances were zero. Prepare a statement of cash flows for Kate's Cards for the year ended August 31, 2019, using the direct method. (Appendix 12A) 8cambridge Business Publishers Chapter 12 615 Statement of Cash Flows KATE'S CARDS Income Statement Year Ended August 31, 2019 Sales revenue. , . Cost of goods sold . .. Gross profit. . . . Operating expenses $185,000 106,000 Wages 79,000 Consulting. Insurance . 18,000 11,850 1,200 Utilities. Rent . .. Depreciation. . Total operating expenses. Income from operations. Interest expense. . 2,400 14,400 3,250 51,100 27,900 Income before income tax Income tax expense. . 900 27,000 Net income. 5,400 $ 21,600 KATE'S CARDS Balance Sheet As of August 31, 2019 Assets Current assets Cash.... ... $17,400 Accounts receivable.. 11,000 Inventory. . . 16,000 1,000 Prepaid insurance. Total current assets. 45,400 Equipment ... Accumulated depreciation. 17,500 (3,250) Total assets . $59,650 Liabilities Current liabilities .. $ 6,200 1,250 1,900 Accounts payable. .. .. Unearned revenue . Other current liabilities.. .. 9,350 Total current liabilities. . .. . Note payable. .. Total liabilities. . . . 15,000 24,350 Stockholders' equity Common stock. . . . . Additional paid-in-capital. Preferred stock. . .. Retained earnings Total stockholders' equity. .. 500 9,500 5,000 20,300 35,300 $59,650 Total liabilities and stockholders' equity.. ..