# ventory purchases only.Statement of Cash Flows (Direct Method) Refer to the data given for the Geary Company imPrepare a statenlellfor wages and other operating expenses." AcccashPadUtitiesRent ..DepreciaTotal opb.P12-9B.LO4(Appendix12A)IncomeInteresProblem P12-4B.RequiredCompute 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 pMBCIncomхa.IncorpaidNetfor 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 incomestatements and balance sheets, so she knows that her company has been profitable and that there iscash in the bank. She has not, however, prepared a statement of cash flows. Kate providesthe year-end income statement and balance sheet and asks that you prepare a statement of cash flowsSP12.Kate'syou withCardsfor Kate's Cards.Additional information:1. There were no disposals of equipment during the2. Dividends in the amount of \$1,300 were paid in cash during the3. Prepaid expenses relate to operating expenses.year.year.RequiredPrepare a statement of cash flows for Kate's Cards for the year ended August 31, 2019, usingthe indirect method. Hint: Since this was Kate's first year of operations, the beginning balancea.sheet account balances were zero.Prepare a statement of cash flows for Kate's Cards for the year ended August 31, 2019, usingthe direct method. (Appendix 12A) 8cambridge Business PublishersChapter 12615Statement of Cash FlowsKATE'S CARDSIncome StatementYear Ended August 31, 2019Sales revenue. , .Cost of goods sold . ..Gross profit. . . .Operating expenses\$185,000106,000Wages79,000Consulting.Insurance .18,00011,8501,200Utilities.Rent...Depreciation. .Total operating expenses.Income from operations.Interest expense. .2,40014,4003,25051,10027,900Income before income taxIncome tax expense. .90027,000Net income.5,400\$ 21,600KATE'S CARDSBalance SheetAs of August 31, 2019AssetsCurrent assetsCash....... \$17,400Accounts receivable..11,000Inventory...16,0001,000Prepaid insurance.Total current assets.45,400Equipment ...Accumulated depreciation.17,500(3,250)Total assets .\$59,650LiabilitiesCurrent liabilities.. \$ 6,2001,2501,900Accounts payable. .. ..Unearned revenue .Other current liabilities.. ..9,350Total current liabilities. . .. .Note payable. ..Total liabilities. . . .15,00024,350Stockholders' equityCommon stock. . . . .Additional paid-in-capital.Preferred stock. . ..Retained earningsTotal stockholders' equity. ..5009,5005,00020,30035,300\$59,650Total liabilities and stockholders' equity.. ..

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