SERIAL PROBLEM: KATE'S CARDS (Note: This is a continuation of the Serial Problem: Kate's Cards from Chapter / through Chapter 12 SP13. Kate is very pleased with the results of the first year of operations for Kate's Cards. She year on a high note, with the company's reputation for producing quality cards leading to ness than she can currently manage. Kate is considering expanding and bringing in severs ees. In order to do this, she will need to find a larger location and also purchase more equi this means additional financing, Kate has asked you to look at her year-end financial state you were a banker considering giving Kate a loan. Comment on your findings and provide tions to support your comments. te's Cards. She ended the ds leading to more busi- in several employ base more equipment. All financial statements as if and provide calcula KATE'S CARDS Income Statement Year Ended August 31, 2019 . $185.000 106.000 79.000 Sales revenue....... Cost of goods sold ............. Gross profit............ Operating expenses Wages...... . Consulting........ . Insurance ... Utilities. Rent ...... Depreciation............ Total operating expenses...... Income from operations ...... Interest expense... Income before income tax ........ Income tax expense.......... Net income 18,000 11,850 1.200 2.400 14.400 3.250 51,100 27,900 27.000 5.400 21.600 KATE'S CARDS Balance Sheet August 31, 2019 $17.400 Assets Current assets Cash... Accounts receivable. Inventory.. Prepaid insurance. ... Total current assets Equipment ... Accumulated depreciation ... Total assets 45.400 $59,650 15.000 14.350 Labates Current liabilities Accounts payable.. Uneamed revenue... Other current liabilities Total current liabilities. Note payable Total liabilities... Stockholders' equity Common stock Additional paid-in-capital... Preferred stock.. Retained earnings ......... Total stockholders' equity. Total liabilities and stockholders' equity.... 500 9.500 5.000 20.300 35.300 $59,650 KATE'S CARDS Statement of Cash Flows Year Ended August 31, 2019 $21.600 3.250 (11.000) (16.000) (1.000) 6.200 1.250 1.900 6.200 Cash flow from operating activities Net income... Add depreciation......... Increase in accounts receivable. Increase in inventory..... Increase in prepaid expenses.. Increase in accounts payable.. Increase in unearned revenue ... Increase in other current liabitios .. Cash provided by operating activities.... Cash flow from investing activities Purchase of equipment..... Cash used by investing activities ... Cash flow from financing activities Proceeds from bank note... Issuance of common stock. Issuance of preferred stock.... Cash dividends.. Cash provided by financing activities Net increase in cash........ Cash at beginning of year...... Cash at end of year .......... (17.500) (17,500) 15,000 10.000 5.000 (1.300) 28,700 17,400 $17.400 alued cash dividends on both the common stock and the preferred stock. There are 50 preferred shares anding and 500 common shares outstanding. The dividends that Kate pand were so per share on the preferred wres and $2 per share on the common shares